2. Copart Inc. (NASDAQ:CPRT)
Number of Hedge Fund Investors: 50
Copart Inc. (NASDAQ:CPRT), specializing in online vehicle auctions, is one of the best used car stocks to buy according to hedge funds. Founded in 1982, the company has grown from a single salvage yard in California to a global operation with over 200 locations across 11 countries. Copart’s online auction platform offers a wide range of vehicles, catering to various buyers, including used car enthusiasts, dismantlers, dealers, body shops, and salvage buyers. With nearly 200,000 vehicles available daily, the inventory includes used, wholesale, and salvage title cars sourced from insurance companies, finance companies, fleet operators, rental firms, dealers, and charities. Through Copart Direct, the company provides a quick and easy way for individuals to sell their used, damaged, or unwanted vehicles.
The company’s success stems from its unique blend of digital and physical assets. Copart’s advanced online auction technology allows users to bid on vehicles from the comfort of their homes, while its extensive inventory spread, spanning over 8,000 acres, supports efficient vehicle management. This combination allows Copart Inc. (NASDAQ:CPRT) to efficiently manage the entire process from vehicle acquisition to sale, serving a diverse customer base and selling over two million vehicles annually.
CPRT recently reported results for the fourth quarter of fiscal ’24. Earnings per share (EPS) of $0.33 fell short of the expected $0.36. Despite this earnings miss, Copart Inc. (NASDAQ:CPRT) reported strong performance in its fourth quarter and fiscal year 2024, with global unit sales increasing by 8% compared to the fourth quarter of 2023. Revenue for the quarter reached nearly $1.1 billion, a growth of about 7%. For the fiscal year 2024, global revenue increased by 10% year-over-year to reach above $4.2 billion, representing growth of over $367 million.
In Q4 2024, the company’s US business saw unit growth of over 6% year-over-year, driven by significant increases in both fee and purchase units. Copart’s (NASDAQ:CPRT) international business experienced even more impressive growth, with unit sales rising nearly 17% in the fourth quarter and 21% for fiscal year 2024, compared to the same periods last year.
Notably, non-insurance unit volume growth has continued to outpace unit volume growth from insurance clients, with fleet rental and finance units growing over 20% in the fourth quarter and 28% for the year, compared to the same periods last year. Unit volume growth from car dealers and dealerships also increased nearly 10% for the quarter and over 15% in the fiscal year 2024. This diverse revenue stream highlights Copart Inc.’s (NASDAQ:CPRT) ability to adapt and thrive in a competitive market.
Additionally, Copart Inc. (NASDAQ:CPRT) generated an impressive free cash flow of $962 million for the year, reflecting its operational efficiency and strong financial health. The company continues to invest in expanding its infrastructure. During the Q4 2024 earnings call, management reported that the company has acquired over 1,100 acres of land and 370 transportation assets as well as enhanced physical infrastructure.
Over the past ten years, Copart Inc. (NASDAQ:CPRT) has managed to grow its revenue at a compound annual growth rate (CAGR) of 13.80%, while its net income has increased at a CAGR of 22.53% during the same period.
With a solid track record of growth, Copart Inc. (NASDAQ:CPRT) represents a compelling investment opportunity. It has gained significant interest from institutional investors, with the number of hedge fund holders increasing to 50 in Q2 2024, up from 41 in the previous quarter. This reflects growing confidence among investors in CPRT’s long-term potential and its ability to deliver consistent growth.
