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When Should You Buy O’Reilly Automotive Inc (NASDAQ:ORLY)?

Today we’re going to take a look at the well-established O’Reilly Automotive Inc (NASDAQ:ORLY). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at O’Reilly Automotive’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for O’Reilly Automotive

What’s the opportunity in O’Reilly Automotive?

According to my valuation model, the stock is currently overvalued by about 34.09%, trading at US$353 compared to my intrinsic value of $262.96. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since O’Reilly Automotive’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will O’Reilly Automotive generate?

NasdaqGS:ORLY Future Profit November 20th 18

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 8.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for O’Reilly Automotive, at least in the short term.

What this means for you:

Are you a shareholder? ORLY’s future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ORLY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ORLY for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on O’Reilly Automotive. You can find everything you need to know about O’Reilly Automotive in the latest infographic research report. If you are no longer interested in O’Reilly Automotive, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.