This contrarian pick has richly rewarded shareholders over the years.
If you could only own one stock — one stock to rule them all — what would it be?
For many investors, the list of potential candidates might start with the “Magnificent Seven”: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. In my opinion, you could make a strong case for any of those stocks.
And I could see why some investors would gravitate toward Berkshire Hathaway, which is like an ETF bundled within a single stock.
But I have my sights set on a stock that has quietly delivered a 58,000% return since it began trading in 1991. The business isn’t flashy, but it’s indispensable. It’s a cash cow in good times and bad. And the company’s share-buyback program can only be described as relentless.
I’m talking about AutoZone (AZO 2.74%).
Image source: Getty Images.
You know the jingle
AutoZone is an auto parts retailer that likely needs no introduction, because that ubiquitous jingle — “Get in the zone, AutoZone!” — is probably living rent-free in your head. But if you’ve never peeked under the hood of AutoZone’s business, you might be surprised by how strong the engine is.
Founded in 1979, AutoZone has grown from a single store in Forrest City, Arkansas, to more than 6,600 stores in the United States. AutoZone also is expanding internationally, with 883 stores in Mexico and nearly 150 in Brazil.
For the company’s fiscal year 2025, which ended Aug. 30, AutoZone reported net sales of $18.9 billion, a 4.5% increase over the previous year on a 52-week basis. U.S. same-store sales — also known as comparable-store sales — were up 3.2%, while international same-store sales were up 9.3%, adjusting for the negative effects of currency exchange rates.
Tariff-driven cost inflation, a stronger U.S. dollar, and AutoZone’s aggressive expansion efforts have put pressure on earnings. Net income dipped 6.2% to $2.5 billion in fiscal 2025, and diluted earnings per share fell 3.1% to $144.87.
In fact, AutoZone’s fiscal 2025 Q4 results marked the fifth consecutive quarter that the company has fallen short of analysts’ earnings estimates. Yet the stock is up 24% this year, as of Oct. 9, which tells me that investors are focusing on the big picture. Here’s why you might consider doing the same.
A huge total addressable market
One way to assess a company’s growth prospects is to look at its total addressable market. AutoZone is one of the leading retailers in the automotive aftermarket. Industry associations expect the total value of the U.S. automotive aftermarket to reach $576 billion in 2025, and globally, it’s valued at $2.3 trillion. . With the number of vehicles on the road and the average age of vehicles at an all-time high, demand for replacement parts should continue to be strong.
AutoZone has been investing heavily in its sales and distribution footprint to capture more market share. In fiscal 2025, AutoZone’s capital expenditures rose 27% to nearly $1.4 billion. The company opened 304 new stores — the most since 1996 — and two new distribution centers. Management expects fiscal 2026 capex spending to be in the same ballpark, with most of it focused on “accelerated store growth.”
Some of those new stores are larger stores that function like mini distribution centers. “Megahubs,” for example, are supersized AutoZone stores carrying more than 100,000 SKUs (individual products). Megahubs have been outperforming traditional stores, and they’re helping smaller stores in their area fulfill orders faster. AutoZone’s ultimate goal is to have 300 megahubs.
In fiscal 2025, AutoZone generated nearly $3.2 billion in operating cash flow, so it’s in a strong position to keep investing in the business. Given the sheer size of the automotive aftermarket, the payoff could be massive. But there’s another reason I’m such a huge fan of this stock.
AutoZone knows how to treat shareholders
Since fiscal 1998, AutoZone has scooped up $38.5 billion worth of its own shares. Over the past 10 years, AutoZone reduced its outstanding share count by 45% — and it’s still buying more shares.
Share buybacks are a tax-efficient way to return capital to shareholders, and they signal management’s confidence in the business. By reducing the supply of shares available in the market, share buybacks can enhance earnings per share and increase demand for the remaining shares — both of which can drive the stock price higher.
You can see the inverse relationship in this chart:
AZO Shares Outstanding data by YCharts
Inelastic demand
There’s something else that makes AutoZone a strong candidate for this “what-if” hypothetical.
The automotive aftermarket benefits from a concept known as inelastic demand — meaning consumers will make essential repairs to their vehicles regardless of the macroeconomic conditions. In fact, auto parts retailers often shine in tough times, because consumers tend to pull back on buying new vehicles. As a leader in this space, AutoZone might be the ultimate recession-resistant stock, well-positioned for growth in boom times and busts.
Josh Cable has positions in Alphabet, Amazon, Berkshire Hathaway, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
