Copart Stock Hits Key Support – Buying Opportunity?
Copart (CPRT) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($42.68 – $47.18), levels from which it has bounced meaningfully before. In the last 10 years, Copart stock received buying interest at this level 3 times and subsequently went on to generate 19.0% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 5/19/2023 | 6.2% | 59 |
| 8/10/2023 | 4.5% | 27 |
| 10/2/2023 | 46.4% | 592 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For CPRT Read Buy or Sell CPRT Stock to see how convincing this buy opportunity might be.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Let us ask you this: Over the last 5 years, which index do you think the Trefis High Quality Portfolio outperformed – the S&P 500, S&P 1500 Equal Weighted, or both? The answer might surprise you. See how our advisory framework helps stack the odds in your favor.
Here are some quick data points for Copart that should help decision:
- Revenue Growth: 9.7% LTM and 9.9% last 3 year average.
- Cash Generation: Nearly 26.5% free cash flow margin and 36.5% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for CPRT was 10.2%.
- Valuation: CPRT stock trades at a PE multiple of 28.0
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better margins
For quick background, Copart provides online vehicle auctions and remarketing services globally using advanced virtual bidding technology for licensed dismantlers, rebuilders, dealers, and exporters.
| CPRT | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Diversified Support Services | – |
| PE Ratio | 28.0 | 24.2 |
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| LTM* Revenue Growth | 9.7% | 5.1% |
| 3Y Average Annual Revenue Growth | 9.9% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 10.2% | -0.1% |
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| LTM* Operating Margin | 36.5% | 18.6% |
| 3Y Average Operating Margin | 37.3% | 17.8% |
| LTM* Free Cash Flow Margin | 26.5% | 13.1% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, Copart hasn’t been immune to big drops. It fell 52% in the Global Financial Crisis and about 44% in both the Dot-Com bust and the Covid sell-off. The 2018 correction hit it for 32%, and during the recent inflation shock, it still dipped around 35%. Strong fundamentals matter, but when the market hits turbulence, even solid stocks like CPRT can take a serious hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read CPRT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.