Copart is Tuesday's pick for IBD 50 Growth Stocks To Watch. The auto auction company is nearing a buy point in a cup base as Copart stock is closing in on its all-time high.
Copart specializes in the resale of a wide variety of used vehicles through an online auto auction platform. Its vehicles come from insurance firms, rental car companies, financial institutions and charities. It sells mainly to dealers, body shops and salvage buyers.
Copart currently operates more than 200 locations in 11 countries and has more than 250,000 vehicles up for auction every day.
On Oct. 10, the company announced a new strategic partnership with Purple Wave, an online heavy equipment auction company.
"Through our strategic investment and partnership, we will leverage our areas of expertise for the benefit of our respective marketplaces," Co-Chief Executive Jeff Liaw said in the news release announcing the deal. Copart also recently partnered with property and casualty insurance texting platform, Hi Marley, to codevelop auto insurance products.
Auto Auction Stock Nears A Buy Point
Copart is ranked No. 1 out of 10 stocks in the retail/wholesale auto parts group. But the group ranks No. 125 out of the 197 industry groups tracked by Investor's Business Daily.
Copart stock is in a cup base and nearing a 47.38 buy point, according to MarketSmith pattern recognition. The buy point is also its all-time high set on July 17. Its relative strength line hit a 52-week high on the MarketSmith charts. Shares gained more than 52% this year.
Shares sold off more than 2% in heavy volume following company's fiscal fourth-quarter earnings release on Sept. 14. The auto auction stock traded below its 50-day moving average and hit the base's low on Oct. 3.
Copart stock then retook the 50-day line in a six-day rally that helped form the right side of the cup. Shares are about 2% from the buy point.
Earnings Growth Expected To Continue
The company beat its fiscal fourth-quarter profit and sales expectations on Sept 14. Earnings grew 17%, following gains of 24% and 11% in the prior two quarters. Sales growth improved 13%, from 9% and 10%.
Fiscal 2023 annual revenue grew 10.5% over the prior year while profit grew 13.5%, according to the earnings release. Analysts project full-year fiscal 2024 per-share earnings growth of 14% and 13% in 2025, according to MarketSmith data.
The auto auction firm has a low IBD Earnings Stability Rating of 6, suggesting the company has a history of stable earnings over the last three to five years.
Institutions have been moderately adding shares of Copart stock in the last 13 weeks. Shares have an Accumulation/Distribution Rating of B.
Mutual funds own 53% of shares with 1,972 funds holding the stock in September. That's down from 1,995 in the June quarter, but higher than the 1,868 reported in March. Also, management owns 7% of shares.
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