Retail Data Shows Urgency in Auto Parts: These 3 Stocks Could Win

Key Points

• After a sudden jump in retail sales data, the auto parts and automaker sector seems to be the top pick for analysts and institutions today.
• Three names stand out in terms of upside potential and other sentiment gauges based on the latest developments. 
• Short sellers are leaving as institutions buy, and Wall Street analysts still call for double-digit upside across the list.

The new economic environment has shifted to a new view lately, especially as the implications of new trade tariffs rolled out by President Trump start to take effect on both the psychology and budget of the consumer. More than that, business owners and managers are now starting to make buying decisions based on the potential impact of these tariffs as well. All of this volatility and change does create an opportunity, but only for those who know what to look for.

After realizing that bottlenecks were going to come into the scene faster than expected, President Trump exempted auto parts and auto makers from these trade tariffs, perhaps just in time for the latest set of monthly retail sales data to have rolled out, which showed a specific move and impact in the automotive sector. There are some strategies for these tariffs, but more importantly, they are a great gauge for investors to consider moving forward.

Three stocks in the sector might benefit from the shift in sales over the past month, especially now that tariff exemptions might level off some of the fears present in the price and cost impact for auto parts and manufacturers. Today’s list includes names like AutoZone Inc. NYSE: AZO, O’Reilly Automotive Inc. NASDAQ: ORLY, and  Advance Auto Parts Inc. NYSE: AAP to deliver momentum and potential double-digit upside to portfolios moving forward.

What’s Happening With Auto Parts Sales?

After showing a contraction for the past quarter, auto parts and dealer sales seemed to be getting colder and colder due to tariff expectations running up to April 2025. However, a sudden jump was spotted once the latest monthly report hit the market, as auto parts and dealer sales jumped by 5.3% over the month of March alone.

This shift from contraction to a sudden surge, making the auto parts industry the standout performer for the reporting period, can largely be attributed to consumer psychology. With the expectation that auto parts may become more expensive in the coming months, consumers are acting preemptively. For savvy investors, the contrast with other categories in the report highlights exactly where the urgency and opportunity lie.

Because of this urgency to buy auto parts before anything else, even with exemptions now in place, investors can expect these three stocks to turn in great quarterly reports, potentially driving their stock prices higher as well.

AutoZone Stock: An Institutionally Strategic Pick

Over the past quarter, up to $6.2 billion of institutional capital made its way into AutoZone stock, with the newest quarter (April 2025 so far) showing an additional buying spree of $3 billion. Leading the latest buying wave were those at GAMMA Investing, who built up a stake of up to $2.9 billion as of April 2025.

This new position gives the investor up to a 4.6% ownership stake in AutoZone. The timing of the acquisition suggests that future demand expectations may align with trends observed in the latest retail sales report.

Knowing that the odds are shifting in favor of the buyers, up to 6.4% of AutoZone’s short interest declined over the past month, a clear sign of bearish capitulation as these sellers face the mounting pressure of stronger fundamental themes and tailwinds. This makes AutoZone a clear target for those looking to ride the post-tariff wave higher.

Wall Street Likes O’Reilly This Quarter

Analysts typically shy away from boosting a stock that has been subject to uncertainty and bearish price action, which makes it interesting to see Wells Fargo analysts keep their Overweight rating on O’Reilly stock as of April 2025, only a couple of days after President Trump announced the exemption of auto tariffs.

Along with this rating came a price target of up to $1,550 for the stock, calling for a new 52-week high that might attract new momentum buyers on the breakout. However, this implies the stock needs to rally by as much as 12% from where it trades today, offering the next set of opportunities for investors to consider.

According to Wall Street analysts, the $11.94 forecast for earnings per share (EPS) in the third quarter of 2025 is driving these expectations. These forecasts suggest that O’Reilly can grow its earnings by as much as 23% from today’s reported $9.73 in EPS, the fundamental reason why investors can feel confident in this new high.

Advance Auto Parts Is The Asymmetric Opportunity Here

Now that Advance Auto Parts stock trades at only 40% of its 52-week high, investors might assume that the worst-case scenario for the company has already been priced into the stock’s price today. This setup eliminates the downside left in the company while leaving investors with most of the upside potential.

Preparing for a potentially great quarter coming up after the jump in retail sales, Wall Street analysts now see a consensus price target of up to $45.1 per share on Advance Auto Parts stock, which implies up to 42% upside to go along with this bullish thesis.

More than that, markets are prepared to pay up to 43.5x price-to-earnings (P/E) for the stock today, a steep premium to the rest of the automotive sector’s 21.9x valuation. Seasoned traders and investors will remind everyone that these premiums typically have a strong reason behind them, and markets have landed on this fundamental tailwind to justify their overpaying.