The S&P 500 index rose 24% in 2023 and climbed another 23% in 2024, putting together a stellar 24-month return. Investors were pleased with the outcome.

However, this year is so far shaping up to be a disappointment. The S&P 500 is around 15% below its peak, a record that was established in February. Investors are worried that President Donald Trump's trade policies will tip the economy into a recession, so they're taking some risk off the table.

If you're worried that the market is going to drop even further, then there's one stock to keep an eye on. It's actually up 17% this year, showcasing investor confidence in the business.

Steady as they come

In the past couple of years, the investment community has been enamored with businesses at the forefront of artificial intelligence (AI). The belief is that this technology will disrupt many industries, and so they've generally shifted their portfolios to gain exposure.

O'Reilly Automotive (ORLY 1.91%) could not be further from the AI boom. It's a boring aftermarket auto parts retailer that is a steady performer, regardless of macro conditions. And I think the market sees this durability, which is why the share price has jumped double-digits so far in 2025.

Through its 6,378 stores, of which 6,265 are in the U.S., and via its omnichannel presence, O'Reilly sells things like batteries, brakes, motor oil, wiper blades, and filters to both do-it-yourself customers and professional mechanics. Basically, people buy merchandise from O'Reilly to fix up their cars.

In a positive economic backdrop, consumers tend to drive more, increasing the wear and tear on their vehicles. This supports demand for the company. And in difficult economic times, people will hold off buying a new car. Instead, money will go toward maintaining the cars they already own. Again, O'Reilly benefits.

While tariffs are on everyone's mind these days, they might actually end up benefiting O'Reilly as people are discouraged from shopping for new cars because of higher prices. This all-weather appeal might be too hard for investors to ignore.

Strong financials

One of the most important metrics for a retailer is same-store sales (SSS), as it indicates changes in revenue from locations that have typically been open at least a year. O'Reilly has an unbelievable track record, increasing SSS in 32 straight years. The management team expects this figure to rise 2% to 4% this year, which would keep the streak alive.

The business has found a way to maintain its growth trajectory no matter what is happening externally. Unsurprisingly, this has led to strong profit gains, with earnings per share increasing at a compound annual rate of 18.7% in the past decade. With new store openings a key part of the strategy, the bottom line is set to keep growing.

Not on sale

Since mid-April 2015, shares of O'Reilly have catapulted 546% higher. This fantastic gain meaningfully outpaces the broader S&P 500. Consequently, the valuation isn't cheap. Investors who want to own this stock must be comfortable paying a price-to-earnings ratio of 34.2. That's over 40% more expensive than the trailing five- and 10-year average multiples.

The market is clearly very bullish on O'Reilly. That perspective is easy to understand. However, the valuation is too steep, even though this is a high-quality business.

O'Reilly has been a huge winner in the past. But I think it's best for investors to add the stock to the watch list for now. Wait for any sizable pullbacks before considering putting money to work.