Are you looking to invest in stocks that have shown impressive growth over the past decade? While tech-focused companies often come to mind, there are two lesser-known, but highly successful, retail stocks that have outperformed the market: O’Reilly Automotive (NASDAQ: ORLY) and AutoZone (NYSE: AZO).
O’Reilly Automotive has seen a 678% increase in the past 10 years, while AutoZone has risen 498% during the same period. These companies may not be as flashy or disruptive as some tech giants, but their steady and consistent performance has proven to be a winning strategy for investors.
Both O’Reilly and AutoZone operate networks of thousands of stores selling aftermarket car parts and supplies to both DIY and commercial customers. With the average age of vehicles on the road increasing and more miles being driven, there is a growing demand for aftermarket parts. This makes both companies somewhat recession-proof, as people rely on their vehicles for essential daily tasks.
In terms of capital returns, O’Reilly and AutoZone have generated significant profits and cash flow, with both companies recording billions in free cash flow in their last fiscal years. While neither pays dividends, both companies have been aggressive in share buybacks, reducing their share counts by substantial amounts in recent years.
Despite their impressive performance, it’s worth considering the current valuations of O’Reilly and AutoZone. Both stocks are trading at some of their highest levels in the past decade, indicating that they may not be undervalued. However, their consistent growth and financial stability have attracted optimistic investors who believe in their long-term prospects.
If you’re considering investing in O’Reilly and AutoZone, it may be wise to allocate a portion of your investment portfolio to these stocks and hold for the long term. While they may not be trading at bargain prices, their proven track record of success suggests that they could continue to deliver strong returns in the future.
Before making any investment decisions, it’s essential to conduct thorough research and consider your risk tolerance and investment goals. Consulting with a financial advisor can also help you make informed choices about where to allocate your funds for long-term growth.
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