This Stock Is Up 55,000% Since Its IPO: Here's 1 Reason It Could Still Be a Smart Buy

History may not always repeat, but the past can serve as a guide

For investors, looking at previous market winners might help us identify stocks that could outperform from here

In that vein, consider a leading niche retailer that usually flies under the radar

Yet even after those monster gains, there's one reason why it could still be a smart buy

Image source: Getty Images

A favorable tailwind that drives demand The modern world is constantly being reshaped by the forces of cutting-edge nology -- cloud computing, AI, digital payments, and e-commerce to name just a few

And those nologies are viding serious tailwinds to many of the es connected to them

However, one understated tailwind will continue to benefit this aftermarket auto parts retailer

A recent report released by S&P Global showed that the average age of vehicles on the road in the U

This figure has climbed for eight straight years

While that secular trend may not be as exciting as the others mentioned, it will be a reliable boon for O'Reilly

It sells various ducts, including motor oil, air s, brake pads, floor mats, and batteries, among many other things, to both do-it-yourselfers and fessional mechanics

Aftermarket is the key thing investors should remember -- these are ducts that aren't usually made by the original car manufacturers

Consumers shop at O'Reilly to extend the s of their vehicles

More mileage means more upkeep The greater the mileage is on a car, the more upkeep it will require

Natural wear and tear isn't hard to understand

But most car warranties expire after three to five years, after which whatever goes wrong is strictly the owner's blem

As cars stay on the road for more years and more miles, demand gets stronger for the stuff that O'Reilly sells

The macroeconomic environment is also helping the retailer

With interest rates on auto loans at some of their highest levels in the past decade and other material and labor costs up as well, buying a car is less affordable

This incentivizes people to spend money on repairing the vehicles they already own

These trends have shown up in O'Reilly's financial performance

In 2024, the company reported a same-store sales increase of 2

That was its 32nd straight year of growth, which is unheard of for any retailer

This demonstrates the company's ability to thrive regardless of economic conditions

O'Reilly is a winner, but can the good times continue

There's a lot to this company

Steady demand that pels revenue and earnings higher is undoubtedly one reason that O'Reilly should be on your radar

Management has also aggressively used its free cash flow to buy back stock

However, the valuation isn't cheap, and that's my main concern

But given the company's impressive track record, other investors might have a different view

Neil Patel has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends S&P Global

The Motley Fool has a disclosure policy.