Doubling Up on the Automotive Sector

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week, the Alpha Algorithm churned out another stock in the booming U.S. automotive sector — similar to your current recommendation in Autozone (AZO). And much like AZO, this stock has also attracted the attention of six different algorithm-based strategies.

OReilly Automotive, Inc. (ORLY), together with its subsidiaries, retails aftermarket auto parts, tools, supplies, equipment and accessories in the United States. On Feb. 11, ORLY reported a 24% increase in earnings to $2.19 per share in the fourth quarter of 2015 from $1.76 in the year-ago quarter. Earnings also exceeded consensus estimates by 12 cents.

orly
ORLY (blue) vs. the S&P 500 (red) over one year

  

Six Top Investment Strategies Betting on O’Reilly Automotive Inc. (ORLY)

  1. Broker’s Best

One of Raymond James’ selection of stocks expected to outperform the S&P 500 over either a six- or 12-month period.

  1. Momentum Model

The stock is among the top approximately 100 U.S.-listed companies to demonstrate powerful relative strength characteristics relative to the 3,000 largest U.S.-listed companies.

  1. IBD Top Fifty

It is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings, new product) or technical (upward stock move on strong volume) catalysts.

  1. Value Line Model

The stock is among the top 100 stocks, from a universe of 1,700, to which Value Line gives a no. 1 ranking in its Timeliness Ranking System.

  1. Shareholder Yield

It is among companies (a) paying cash dividends, (b) engaging in net share repurchases and (c) paying down debt on their balance sheets.

  1. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

Exclusive  Betting on the Online Travel Revolution -- and a New Option Recommendation

Recommendation

Buy O’Reilly Automotive, Inc., (ORLY) at market today.

Place your stop at $248.

Options

With the stock currently technically overbought, I am holding off on recommending options on the stock today.

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The holiday-shortened week was broadly flat across global stock markets, with the Dow Jones up 0.29%, the S&P 500 rising 0.25% and the NASDAQ rising 0.52%. The MCSI Emerging Markets Index pulled back 0.26%. Big gainers in your Alpha Investor Letter portfolio included Costco Wholesale Corporation (COST), rising 1.99%, and the Vanguard Russell 2000 Index ETF (VTWO), adding 1.18%. As you know, I like to provide a global perspective on stock markets.

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