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O’Reilly Automotive Inc. (ORLY)

This auto parts stock is gathering momentum after trouncing earnings estimates.

O’Reilly Automotive Inc. (ORLY)

O’Reilly Automotive Inc. (ORLY) is one of the largest specialty retailers for aftermarket parts, automotive tools and professional service equipment in the United States. The company has more than 4,465 stores throughout 43 states as well as a lucrative online store.

ORLY caters to both do-it-yourself customers and professional installers, selling everything from new and remanufactured auto parts (such as alternators, fuel pumps), maintenance items (oil, antifreeze), accessories (floor mats, seat covers) and auto body paint. O’Reilly Automotive also has a wind product offering. And the company specializes in locating hard to find parts, making them a go-to choice for car enthusiasts.

In the second quarter, O’Reilly Automotive’s sales rose 10.3% year-on-year to $2.04 billion. Over the same period, the company’s same-store sales rose 7.2%, compared with 5.2% a year ago. Over the past four quarters, ORLY’s earnings have risen 19.9% to $234 million, or $2.29 per share. Excluding extraordinary items, the company’s operating earnings were $2.40 per share. The analyst community was expecting operating earnings of $2.26 per share, so O’Reilly Automotive posted a 6.2% earnings surprise.

Looking forward, analysts are forecasting 5.6% sales growth and 15.5% earnings growth in the third quarter. Analysts have revised their consensus earnings estimates $0.04 higher in the past month. This is a great sign for the company because when the analysts get aggressive with their revisions, we tend to see an even bigger surprise. ORLY is a Conservative buy under $255.

Louis Navellier, Blue Chip Growth,, 800-718-8289, September 2015