Should You Buy O’Reilly Automotive Stock in 2025? Here’s the Brutal Truth

Auto parts giant O'Reilly revs its engines—but is this stock built for the long haul or headed for the scrapyard?

The Bull Case: A Cash-Generating Machine

Same-store sales keep climbing, DIY demand stays strong, and commercial growth outpaces rivals. Margins? Fat enough to make a private equity firm blush.

The Bear Trap: EV Disruption Ahead

Fewer moving parts in electric vehicles could dent long-term demand. Meanwhile, Amazon keeps gnawing at the aftermarket pie.

The Verdict: A Solid Hold (Unless You Believe in 20th-Century Cars Forever)

O'Reilly executes flawlessly—but even the best-run buggy whip factories eventually close. Bonus jab: If you think 'peak auto parts' is a myth, we've got a 2008 Lehman Brothers prospectus to sell you.

More growth in the tank

Shares of O'Reilly have been going up because the company has been growing rapidly. It's opening new stores at a fast rate, and expects to open a net total of 200 to 210 new stores in 2025, for a total of about 6,500 stores. That already makes it one of the largest auto parts stores by number of locations, just behind industry leader's (AZO 0.41%) 7,200.

However, O'Reilly still has plenty of room to grow. While it has a large presence in the U.S. Midwest and South, it's underrepresented in the Northeast, with fewer than 100 stores in New York or Pennsylvania, and no stores at all in Delaware, Maryland, or New Jersey. Recent economic trends seem likely to boost O'Reilly's growth potential even further. The stock looks like a good buy from a growth standpoint.

Image source: Getty Images.

Priced at a premium

O'Reilly's incredible share price increase hasn't just beaten the market, it's also outstripped its fundamentals. The stock price has risen much faster than the company's rapidly growing revenue and profits. That means O'Reilly stock is much pricier now than it has been in the past. It's trading at 34 times forward earnings, compared to 25 times forward earnings two years ago.

Value investors might think that's too steep a price to pay. But several of O'Reilly's peers, including Autozone, have seen similar valuation increases, and you can always expect to pay more for an outperforming stock. O'Reilly looks like a buy for growth-focused investors.