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

We came across a bullish thesis on Copart, Inc. on Expanse Stocks’s Substack by Nikotes. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc.'s share was trading at $38.98 as of November 28th. CPRT’s trailing and forward P/E were 23.91 and 23.26 respectively according to Yahoo Finance.

Copart, Inc. provides online auctions and vehicle remarketing services in the United States and internationally. CPRT delivered a quarter that separated cyclical noise from structural strength, highlighting the durability of its competitive moat despite soft U.S. insurance unit volumes. Net income grew 22.9% year-over-year to $396.4 million, while gross and operating margins expanded 280 and 310 basis points to 45.3% and 36.5%, respectively, driven by operational leverage and a 5.7% rise in average selling prices (ASPs) in the U.S.

The decline in U.S. insurance volumes, down 2.1%, was primarily cyclical, reflecting underinsurance trends and normal fluctuations in insurer activity, rather than any structural weakness. Internationally, unit volumes rose 3.3% in the quarter and 8.1% for the full year, with higher-margin consignment models in markets like Germany partially offsetting domestic softness. The core thesis remains intact: Copart’s superior auction liquidity and global buyer base of over 300,000 members create intense competition for vehicles, driving higher selling prices and superior returns for insurance clients.

ASP growth outpaced comparable service providers by more than fivefold, reinforcing Copart’s position as a premium partner. Margin expansion amid lower volumes underscores the high operating leverage and pricing power inherent in its model. With $6 billion in total liquidity, Copart retains significant capital allocation flexibility, including potential buybacks or M&A. Looking ahead, key metrics to monitor include U.S. insurance volumes, industry dynamics, and ASP sustainability. This quarter reinforces Copart as a resilient, high-quality business capable of expanding profits even amid cyclical headwinds, demonstrating the enduring value of its moat and long-term attractiveness for investors.

Previously we covered a bullish thesis on Copart, Inc. by Andvari in May 2025, which highlighted the company’s strong cash position, disciplined capital allocation, and global salvage auction model. The company's stock price has depreciated approximately by 27.37% since our coverage. This is because the thesis didn’t fully play out amid near-term market reactions. The thesis still stands as Copart maintains a resilient competitive moat. Nikotes shares a similar but emphasizes margin expansion and ASP growth amid cyclical volume softness.

Copart, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held CPRT at the end of the second quarter which was 57 in the previous quarter. While we acknowledge the potential of CPRT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.