Copart, Inc. (CPRT): A Bull Case Theory

We came across a bullish thesis on Copart, Inc. (CPRT) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc. (CPRT)’s share was trading at $52.82 as of March 10^th. CPRT’s trailing and forward P/E were 35.45 and 33.33 respectively according to Yahoo Finance.

A row of used cars with shoppers inspecting them on a lot.

Copart (CPRT) is a dominant player in the online auction industry, specializing in selling used and salvaged vehicles to buyers worldwide. Its business model is highly resilient, with 85% of its revenue classified as Annual Recurring Revenue (ARR), providing a strong foundation of stability. Over the past three years, Copart has delivered a 12.6% compound annual revenue growth rate, demonstrating its ability to expand consistently. With a gross margin of 45.5% and a free cash flow margin of 22.6%, the company operates with impressive efficiency, converting a substantial portion of its revenue into profit. Copart’s capital allocation strategy is equally compelling, achieving an average return on invested capital (ROIC) of 30.6%, highlighting its ability to generate significant returns from its investments. Moreover, its balance sheet is pristine, boasting a net debt position of -$3.7 billion, meaning it has more cash than long-term debt, further enhancing its financial resilience. Despite a stock beta of 1.3, indicating some market sensitivity, Copart’s fundamental strength positions it as an anti-fragile business, capable of withstanding economic cycles while continuing to grow. With a leadership position in its industry and a high-quality financial profile, Copart represents a compelling investment for those seeking long-term stability and growth.

Copart, Inc. (CPRT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held CPRT at the end of the third quarter which was 48 in the previous quarter. While we acknowledge the risk and potential of CPRT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CPRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.