Quality Equities
Quality Equity Investor, Concentrated Portfolios
Copart is a quietly brilliant business now on offer at a fair price, down about 39% from highs on a cyclical dip in insurance volumes rather than any decline in quality. Modern cars with ADAS sensors and EV batteries cost more to repair, which means more total losses and more volume for Copart; total-loss rates are already 22.8%. It owns an irreplaceable network of 250+ sites in 11 countries, earns about 33% net margins with no debt, and has grown free cash flow per share 31% a year since 2016. x.comÂ
Copart may be an opportunity because its problems look short-term while its fundamentals stay incredibly clean: zero debt, a large cash pile and a cheap valuation. It takes a fee on every online auction of totaled cars insurers send it, without owning them, a cash machine with historically high margins. Since mid-2025, weak winter earnings, lower volumes as safer cars and pricey insurance lead drivers to pay for small accidents themselves, and a dip from its 42% operating margin hurt the stock. … Show more
Copart is the third name on a numbered list that also includes Adobe. x.comÂ
Copart looks more like a cyclical bet on insurance volumes than a durable leader. Its strengths were just as true in 2010-2020, yet something changed, and without identifying what would restore its lead over IAA, the case relies on volumes recovering. Rising ADAS penetration makes the volume problem look secular. x.comÂ
Copart is a Strong Buy at 52-week lows, with Jay Adair's return and the planned ACV acquisition giving reasons to watch for a recovery. Its online auctions sit on a hard-to-replicate network of vehicle yards, a junkyard tollbooth hiding in plain sight, and the stock trades at about 17.6x earnings versus a historical 26.9x. Growth has slowed; the thesis depends on volume recovering and ACV expanding the opportunity. x.com x.comÂ
Copart benefits from driver-assistance and autonomous vehicles because it charges a take rate on the rising dollar value of total vehicle losses. LKQ is the real loser, as a buyer servicing fewer volumes whose European expansion disappointed, and it is now priced for no terminal growth, which could be right. x.comÂ
RB Global is the better stock to own than Copart because Copart is losing market share to RB Global. x.comÂ
Copart's $1.9B all-cash ACV Auctions deal makes sense as a platform buy that moves Copart up the vehicle lifecycle, despite ACV's unimpressive numbers. ACV adds a dealer wholesale marketplace, inspections, transport, financing and AI valuation; combined with Copart's buyer network and vehicle history, that data could decide where each car goes and what it is worth. Copart pays a ~45% premium from $4.5B of cash with no debt and expects accretion from FY2028; its core must keep growing. x.comÂ
Copart's aggressive buybacks and incoming volume make a reversal plausible. Management spent $1.6 billion on repurchases in FY26, retiring over 43 million shares at about $37.63 on average in nine months, above today's price; it still has about $4.5 billion in cash and securities. $27.88 is the trigger, with chart targets at $28.88, $29.66 and $30.80. x.comÂ
Copart probably offers a decent risk/reward at under 20x next-twelve-month earnings, if those numbers are believed to be true. x.comÂ
These 12 stocks are quality compounders sharing pricing power, recurring demand, strong returns on capital and disciplined management. Domino's earns royalties, AutoZone serves an aging fleet, Progressive underwrites with data, Waste Management owns routes and landfills, Grainger is embedded in operations, S&P Global and FICO are mission-critical, Rollins has recurring pest control, Copart an auction network, Visa a fee network, HEICO niche aerospace parts, Costco loyal members. x.com x.com … Show more