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Adam Ritt
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Director of Communications at BetterInvesting (www.betterinvesting.org), a nonprofit dedicated to investment education. Our focus is on long-term investing in growth stocks using fundamental analysis. Companies are mentioned for educational purposes only. No investment recommendations are intended.
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  • O'Reilly Not Out of Gas — Yet 0 comments
    Feb 8, 2010 10:33 AM | about stocks: ORLY
    I've owned shares of O'Reilly Automotive for several years and have been quite happy not only with my return on the stock but also with management's continued excellence in a pretty dry industry. Its latest significant move, acquiring CSK Auto, could have proven a major headache for years to come. Instead, recent results indicate ORLY has been yielding the expected results from this acquisition. Share prices have rebounded to the high $30s, and recently I thought it might be time to part ways with this great stock. My reasoning was that the benefits of the CSK merger might now be priced into the stock, with slower growth in the long term as O'Reilly undergoes the inevitable regression to the mean.

    After using BetterInvesting's long-term fundamental analysis, however, I'm going to continue holding O'Reilly in the short term. Even using conservative but reasonable growth estimates of 8 percent for sales and 10 percent for EPS and lower P/Es in future years, the stock's price still isn't in my sell zone. I'll await fourth-quarter results before I finish my analysis, but my current Stock Selection Guide (the tool BetterInvesting members use to analyze stocks) is showing $48 as the beginning of my sell zone.

    Buy and hold shouldn't mean buy and hold forever. ORLY could well be shifting into lower gear, in which case I'll sell. Before doing so, however, I'll want to make sure the fundamentals are telling me this is the case.




    Disclosure: Long ORLY
    Themes: Auto Parts Stocks: ORLY
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