WarrenAI recommends the top 5 auto parts retailers to watch in 2026: A comparison of value and growth opportunities

Investing.com – Amid economic uncertainty, the automotive parts retail sector continues to demonstrate resilience, with several major companies showing strong fundamentals despite varying valuations. According to a comprehensive analysis using WarrenAI and Investing Pro indicators, this sector offers a combination of high-quality growth stocks and undervalued opportunities for different investors.

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The automotive parts retail industry benefits from the aging US vehicle fleet and consumer trends during economic uncertainty to extend the lifespan of existing vehicles. However, valuation differences indicate that investors should carefully weigh quality versus price when choosing investments in this field.

1. AutoZone (NYSE:AZO)

As the largest company in the sector with a market cap of $62.77 billion, AutoZone demonstrates best-in-class execution and brand leadership. However, with a share price of $3,835.29, Investing Pro’s fair value indicates a potential downside of -25.8%. The forward P/E ratio is 25.1, with an expected earnings growth rate of only 4.2%. Despite strong technicals and analyst support, its premium valuation raises questions. AutoZone’s robust 22.3% EBITDA margin showcases excellent operational efficiency, but slowing growth and high valuation suggest limited upside unless growth accelerates.

2. O’Reilly Automotive (NASDAQ:ORLY)

With a market cap of $80.16 billion and an expected EPS growth of 7.8%, O’Reilly leads in growth metrics within the sector. Its stock price is $96.29, with a forward P/E of 29.7, indicating a -14.1% upside to fair value, suggesting investors are paying a premium for quality. Analysts maintain a “Strong Buy” rating, with a target upside of 13.4%. O’Reilly’s impressive comparable store sales growth makes it a “reasonably priced growth” pick, though any guidance below expectations could impact its valuation.

3. Genuine Parts (NYSE:GPC)

As a dividend champion offering a 3.5% yield and a remarkable 38-year streak of dividend increases, GPC presents a more balanced valuation. Its stock price is $147.06, with a forward P/E of 19.3, and a fair value upside of -6.4%. The analyst target suggests a 13.1% potential increase. Despite recent short-term technical weakness, GPC’s recent 52-week high and operational reliability make it attractive for income-focused investors seeking defensive positions.

4. LKQ Corporation (NYSE:LKQ)

As a clear value standout, with a fair value upside of 29.6%, LKQ is trading at only $34.10, with the lowest forward P/E in the sector at 10.9. Its 3.4% dividend yield adds to its appeal, despite an 8.8% decline over the past year. Analysts forecast a significant 36.1% upside, indicating substantial mean reversion potential. Although facing short-term technical weakness, LKQ represents a classic contrarian opportunity for patient investors.

5. Monro Inc. (NASDAQ:MNRO)

As a high-risk, high-reward choice in the sector, Monro has delivered a 31.6% return over the past year and is forecasted to have an extraordinary 364.9% EPS growth. However, with a stock price of $23.82 and a forward P/E of 40.5, it has the lowest financial stability score among peers (1.82). Monro’s volatile business model offers opportunities and warnings for investors seeking potential turnaround stories in the automotive parts retail space.

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