Abhay Deshpande of Centerstone Investors presented his in-depth investment thesis on O’Reilly Auto Parts (Nasdaq: ORLY) at Best Ideas 2018.

O’Reilly is a leading retailer of automotive aftermarket parts in the U.S. Its stock price has recently languished due to cyclical headwinds and concerns over the competitive threat from e-commerce players. O’Reilly operates a dual market strategy that enables it to efficiently serve both do-it-for-me and do-it-yourself customers. The dual market strategy enables it to leverage its retail distribution and distribution infrastructure. The company has a best-in-class distribution infrastructure that provides it with industry leading parts availability and store in-stock levels. While growth has recently slowed due to cyclical headwinds, Abhay believes O’Reilly can continue to take market share in a fragmented industry and generate strong same store sales growth. As O’Reilly has increased its scale, profitability and returns on invested capital have increased. O’Reilly has a distribution advantage and can grow intrinsic value over time.

Listen to this session:

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About the instructor:

Abhay Deshpande founded Centerstone Investors and serves as the Chief Investment Officer. He has more than 25 years of experience researching and investing in businesses globally. Prior to establishing Centerstone, Mr. Deshpande was a Portfolio Manager at First Eagle Investment Management, advisor to the Global and Overseas strategies that comprised the vast majority of the firm’s approximately $100 billion in assets under management. During his 15-year tenure, his responsibilities included hiring and training analysts along with leading the research team during times of market turbulence. He spearheaded the research efforts during both the 2001 technology and 2008 credit crises, and in both cases his direct efforts helped clients minimize losses, and ultimately thrive, during his career at First Eagle. Previously, Mr. Deshpande was a Research Analyst with Harris Associates, advisor to Oakmark International Fund and other International and Global products. He also was an Analyst for Morningstar responsible for following a variety of International mutual funds. He began his career at a boutique investment advisor in Louisville, KY. Mr. Deshpande holds a BS in Finance from the University of Louisville. He is a CFA Charterholder and a member of the New York Society of Security Analysts.