IIf you ask an American to name one thing they can’t live without, many will say their car. While some consider their car to be nothing more than a simple means of transport, many have a special connection with them. According to a 2019 industry survey by Cars.com, most American auto owners pay more attention to the health of their car than their own.

In recent years, however, more and more car owners are paying attention to their vehicles out of necessity rather than just love. According to a recent report by auto industry experts S&P Global Mobility, the average car in the United States is now over 13 years old. Older cars require more service – service that often involves purchasing more spare parts. Additionally, with the average purchase price of a new car approaching $42,000, current owners are hanging on to their aging cars even longer, a trend that bodes well for continued demand for used auto parts. .

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Walk in O’Reilly Automotive (NASDAQ: ORLY), one of the largest retailers of automotive parts, supplies and accessories in the United States. O’Reilly opened its first store in 1957 in Springfield, Missouri, and the company has served a mix of retail DIY (DIY) customers and professional service providers for over 40 years.

An enviable track record

O’Reilly’s growth strategy can be summed up in two words: consistency and productivity. Over the past twelve years, O’Reilly has grown its store base by nearly two-thirds, and as of March 2022 the company operated 5,811 stores in the United States and 27 stores in Mexico.

In addition to expanding its store base, management has also been able to consistently increase productivity at the store level. Same-store sales increased 14% in 2021, marking the 29th consecutive year of same-store sales growth. Management was able to maintain its in-store productivity streak in the first quarter of 2022, with same-store sales increasing an additional 5%.

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The company’s total sales reached $13.3 billion in 2021, up 15% from $11.6 million the previous year. Total sales have grown at a CAGR of 8.9% over the past twelve years.

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Share buybacks boost EPS growth

In addition to achieving consistent revenue growth, O’Reilly also has a strong operating model that generates significant free cash flow. Management expects the company to generate $1.3 billion to $1.6 billion in free cash flow in 2022. The company has used that free cash flow to aggressively buy back shares — it has spent $880 million in share buybacks in the first four months of 2022 alone. As a result, EPS growth has outpaced operating profit growth in recent years and will likely continue to do so in the future.

Safe harbor in a coming storm?

Concerns about a potential recession have caused investors to sell stocks indiscriminately for most of 2022. Auto parts retailers should be somewhat insulated from general economic weakness, however, as average cars on the road continue to age and require more frequent repairs. O’Reilly’s management has weathered adverse weather in the past and plans to continue moving forward in 2022 with continued gains in same-store sales and the addition of 175-185 new stores. .

Investors looking for consistent growth in tough economic times may find O’Reilly shares an attractive portfolio. The company has achieved consistent sales growth across a wide range of past economic conditions and management is currently using substantial free cash flow to aggressively repurchase stock for the benefit of existing shareholders. Given these consistent long-term operating trends, patient investors should see attractive long-term return potential in O’Reilly stock going forward. Having seen their shares appreciate more than 750% over the past ten years, longtime O’Reilly shareholders are certainly counting their lucky stars.

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John McHugh has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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