3 ETFs to Trade O’Reilly Automotive

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3 ETFs to Trade O’Reilly Automotive

For more than a half-century, O’Reilly Automotive, Inc. (NASDAQ: ORLY) has led the way in delivering aftermarket parts, tools, supplies, and equipment to technicians and do-it-yourself consumers. The Missouri-based firm, established in 1957, has over 5,000 locations, with ambitions to construct a further 200 stores in both new and current regions during 2018. (Also see: What Types of Companies Are in the Automotive Sector Aside from Auto Manufacturers?)

Since breaching over a critical 12-month resistance mark of $290 in July 2018, when the firm posted better-than-expected 2018 second-quarter results, O’Reilly Automotive’s stock price hasn’t looked back. “We are extremely delighted to announce another profitable quarter, highlighted by a healthy 4.6% growth in comparable store sales, which surpassed the top of our expectation range for the second quarter,” said Greg Johnson, CEO and co-president of O’Reilly, according to MarketWatch.

During the quarter, the specialist vehicle store was also popular with institutional investors. Bronfman E.L. Rothschild L.P. upped its stake in O’Reilly Automotive by 4.8%, while Oppenheimer Asset Management Inc. expanded its holding by 2.7%.

Investors seeking exposure to O’Reilly Automotive could consider one of these three exchange-traded funds (ETFs). (For more information, read 4 Stocks That Will Outperform in an Anti-FAANG Portfolio.)

The Invesco DWA Consumer Cyclicals Momentum ETF, launched in 2006, seeks to replicate the performance of the DWA Consumer Cyclicals Technical Leaders Index. The fund does this by investing the majority of its assets in securities that comprise the underlying index. This contains consumer cyclical equities in the United States that are demonstrating price momentum. At 5.64%, O’Reilly Automotive is the ETF’s second largest holding. Amazon.com, Inc. (NASDAQ: AMZN), the world’s biggest e-commerce and cloud computing business, receives 5.85% of the fund’s allocation, while Ross Stores, Inc. (NASDAQ: ROST) receives 5.53%.

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The Invesco DWA Consumer Cyclicals Momentum ETF has $68.63 million in assets under management (AUM) and a 0.6% cost ratio. However, management expenses are substantially covered by the fund’s 0.51% dividend payout. PEZ has five-year and three-year annualized returns of 7.88% and 4.65%, respectively, as of August 2018. The fund has returned an amazing 9.34% year to date (YTD). (See also: Why These 4 Retailers Can Survive Amazon.)

The Invesco DWA Momentum ETF, which debuted in 2007, tries to outperform the Dorsey Wright Technical Leaders Index. To do this, the fund invests at least 90% of its assets in securities that comprise the benchmark index. The basket of the ETF contains 100 large- and mid-capitalization firms weighted by relative stock price performance. O’Reilly Automotive receives 2.99% of the fund’s portfolio allocation. Apple Inc. (NASDAQ: AAPL) and Domino’s Pizza, Inc. are two other top positions (NYSE: DPZ).

The yearly management fee for the Invesco DWA Momentum ETF is 0.63%, which is higher than the 0.45% category average. With $1.55 billion in net assets, it is substantially bigger than PEZ. This low-risk fund has returned 11.74% over the last five years and 8.88% over the last three. As of August 2018, investors have received a YTD return of 8.9%. PDP has a dividend yield of 0.22%. (For further information, see What Technical Tools Can I Use to Measure Momentum?)

The VanEck Vectors Retail ETF (NYSEARCA: RTH) was launched in December 2011 with the goal of replicating the performance of the MVIS US Listed Retail 25 Index. It does this by investing the bulk of its assets in instruments that mirror the monitored index, such as equities and American depository receipts (ADRs). The fund invests in businesses that get at least 50% of their income from retail. RTH’s 2.44% allocation to O’Reilly Automotive gives exposure to the stock. With a 20.8% weighting, Amazon is the fund’s biggest investment. The fund’s basket has 25 equities in total.

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The VanEck Vectors Retail ETF has an AUM of $94.94 million and costs a modest yearly management fee of 0.35%. It has a 1.39% dividend yield. The five-year annualized return on RTH is 14.81%, while the three-year annualized return is 11.38%. The fund’s YTD performance of 12.75% outperforms the Standard and Poor’s 500 index (S&P 500) by over 4% as of August 2018. (For further information, see The Four Rs of Retail Investing.)

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