From Dow Jones Newswires

NEW YORK -- O'Reilly Automotive Inc. rose Monday after the Milwaukee-based investment firm Robert W. Baird upgraded the auto-parts retailer, noting the attractive valuation of the shares after a recent pullback.

Shares of O'Reilly closed up $1.67, or 6 percent, at $29.71 on the Nasdaq Stock Market.

In a research note, analyst J. David Cumberland said the stock is down about 10 percent since the company's second-quarter earnings report, versus a 1 percent gain for the S&P 500 during the same period.

Baird also noted the Springfield, MO, company's strong growth potential and healthy sales.

Amid concerns that higher gas prices will result in a downturn in consumer spending, Cumberland is not worried that O'Reilly will be affected by either, due to the nature of the auto-retail business.

"Compared to other segments of retail, the automotive aftermarket is less sensitive to downturns in discretionary spending, as a large percentage of sales is related to repairing vehicles (done out of necessity rather than choice)," Cumberland said.

Cumberland noted that a weakened economy may result in consumers spending money to repair their current vehicles rather than buy new cars, which would benefit retailers of auto parts.

According to O'Reilly Chief Executive Greg Henslee, the company sees gas prices at or below $4 a gallon as "manageable" as most sales are non-discretionary. Furthermore, O'Reilly features products and services that increase gas mileage.

Cumberland said the fact that O'Reilly began solely as a commercial business is another asset. "Crisp store-level execution, a high proportion of branded parts (appealing to installers), and an efficient supply chain should drive continued growth among local and regional accounts," he said.

2005 Dow Jones Newswires. All Rights Reserved

_______________________________________

Click here to view the rest of today's headlines.