Copart Stock Hits Buy Zone As Driving — And Accidents — Resume – Investor's Business Daily

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$0.98 0.89% 49%

IBD Stock Analysis

  • Copart stock rose to a new high and edged above a 110.10 buy point.
  • The relative strength line also hit a fresh high.
  • But volume was trending below average.

Composite Rating

Industry Group Ranking

Emerging Pattern

Flat Base

* Not real-time data. All data shown was captured at 12:55PM EDT on 10/06/2020.

Copart (CPRT), a company that handles online auctions for damaged vehicles, is the IBD Stock of the Day. Copart stock has cleared a base and is a Long-Term Leader.


Shares have rebounded following the coronavirus lockdown, as more drivers bring their cars — and their bad driving habits — back onto the road.

Copart Stock Breaks Out

Shares rose 1% to 110.81 in the stock market today though volume is tracking below average. The advance on Tuesday put Copart stock above a 110.10 buy point of a flat base. Long-Term Leaders are companies with stable earnings growth and stock prices. The stock has largely run higher since 2016.

Over that time, the relative strength line of Copart stock has moved higher. That line, which compares a stock’s performance with the S&P 500, sat at a record high on Tuesday.

Copart works on behalf of insurers, banks and others to sell used and salvage-title vehicles — or damaged vehicles an insurer has marked as a total loss.

Customers include salvage yards, body shops, dismantlers, dealers and individuals. The company has operations across 11 nations, with more than 170,000 vehicles available for auction online daily.

The company’s business is, in large part, tied to auto accidents and natural disasters. As a Bloomberg article last year noted, today’s tech-laden cars come with more costly repairs, making write-offs more likely, and smartphones are likelier to distract drivers from the road despite advances in car-safety technology. As that article noted, the cars in Copart’s junkyards run the gamut in terms of type, quality and degree of damage.

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Copart Earnings

Sales and earnings have grown over its past five fiscal years. However, in Copart’s fiscal fourth quarter, its most recent, revenue dipped 3%. But the company’s earnings per share rose 7.8%.

As with the broader market, Copart stock fell through February and March. It began rebounding later in the spring.

The company, during its fiscal fourth-quarter earnings call this month, said it noticed “substantial declines in driving activity in March and April,” as more people stopped commuting due to the coronavirus pandemic. But it said that activity had improved since June, with the U.S. rebounding more quickly than other nations.

“The conventional wisdom has been that accident frequency is positively correlated with miles driven because congestion naturally contributes to accident frequency,” CFO Jeffrey Liaw said on the call. “During the pandemic, we’ve seen very strong evidence that the opposite has proven true.”

“With our roads less crowded,” he continued, “speeding and distracted driving had both increased substantially, contributing at least in the near-term to increased accident frequency per miles driven.”

The company declared itself “pandemic-proof” during the call. Copart stock has a strong 93 Composite Rating. Its EPS Rating is 94.


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