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Stock Of The Day Copart Flashes Early Entry, Nears Breakout

Copart

Copart

CPRT


$4.35


3.01%


Stock Of The Day Copart Flashes Early Entry, Nears Breakout135%

IBD Stock Analysis

  • Flirts with 149.16 flat-base buy point
  • Already flashing early entry from 50-day bounce, breaking trend line
  • Revenue growth accelerated for two straight quarters to 42%
Stock Of The Day Copart Flashes Early Entry, Nears Breakout

Composite Rating

Stock Of The Day Copart Flashes Early Entry, Nears Breakout

Industry Group Ranking

Stock Of The Day Copart Flashes Early Entry, Nears Breakout

Emerging Pattern

Stock Of The Day Copart Flashes Early Entry, Nears Breakout

Flat Base

* Not real-time data. All data shown was captured at
1:09PM EDT on
09/15/2021.

Salvaged auto reseller Copart (CPRT) is the IBD Stock Of The Day, cleared aggressive buy areas and flirted with a breakout amid high demand for used cars.




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Copart sells salvaged and clean-title vehicles to dealers, dismantlers, rebuilders and exporters. Its online platform links sellers to more than 750,000 members around the world.

Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and individuals.

Copart Stock

Shares rose 3% to 148.94 on the stock market today. CPRT stock is flashing an early entry as it rebounds from its 50-day line, breaks a trend line and moves above short-term resistance. CPRT stock briefly cleared an official buy point of 149.16 from a flat base, according to MarketSmith chart analysis.

The buy zone extends to 156.62.

Copart was added to Swing Trader Wednesday morning, while CPRT stock also is a Long-Term Leader. Buying near the 50-day line is often a good place to start a position in a Long-Term Leader.

Its relative strength line is trending upward, near recent highs. Its RS Rating is 84 out of a possible 99. Copart’s EPS Rating is 97, having posted five straight quarters of earnings growth.

With a Composite Rating of 96, Copart stock ranks first in IBD’s Retail/Wholesale Auto Parts industry group.

The group has gained 30% so far this year, as prices for used cars and replacement parts have surged amid stalled production of new cars due to supply-chain issues.

Auto parts retailer AutoZone (AZO) edged up 2.1% and O’Reilly Automotive (ORLY) gained 1.7%. Both are working on flat bases as well. AZO stock is still below its 50-day line while ORLY stock is trying to reclaim that level.

Copart Earnings

The Dallas-based company reported fourth-quarter earnings that surged 49% year over year to $1.03 a share. Sales jumped 42% to $749 million, the second straight quarter of accelerating top-line growth. For fiscal 2021, Copart earnings swelled 44% to $3.70, and revenue grew 22% to $2.69 billion.

Copart CEO Jeffrey Liaw said in an earnings call with investors on Sept. 9 that strong used car prices are driving returns. 

The company reported the average selling price for its used vehicles worldwide grew 20.7% for the quarter, with U.S. ASPs up 20.6%.

Part of the uptick is driven by a growing mix of luxury cars on its lots.

“I think if you visited some of our yards, you’d be astonished by some of the high-value Range Rovers and European vehicles that you would see on lots,” Liaw said.

Outlook

Liaw is optimistic that global driving trends will continue to fuel growth.

“We continue to believe that, longer term, mobility will continue to grow the miles per person in the U.S.,” he said. “Certainly in our emerging markets, in many of the countries that are buying our highest value vehicles, (miles per person) will grow significantly.”

Copart is also gearing up to handle increased salvage activity following catastrophic weather events like the recent hurricanes and tropical storms in the U.S. and flooding in Europe.

“We have invested massively in this, anticipating more severe weather over the years to come,” Liaw said. “We have bought and built catastrophic yards that in many cases have run idle simply awaiting a catastrophic event to service our customers again.” 

However, there are indications that used-car prices are leveling off after skyrocketing earlier this year. If chip shortages and other supply-chain issues ease, new-car production could rebound, pressuring used-car prices.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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