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We came across a bullish thesis on Copart, Inc. (CPRT) on Substack by Bulls On Parade. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc. (CPRT)'s share was trading at $61.04 as of April 23rd. CPRT’s trailing and forward P/E were 40.97 and 34.25 respectively according to Yahoo Finance.
A busy car auction being held at a leading car dealership, buyers and sellers engaging in active bidding.
Copart, Inc. (CPRT) is a textbook example of a high-quality compounder that has quietly delivered astronomical returns, transforming a modest salvage yard into a global technology-driven vehicle remarketing juggernaut. With a market cap north of $50 billion in early 2025, it stands as one of the top-performing stocks over the past two decades, a feat few would expect from a business rooted in the junkyard industry. The company’s journey began in 1982 under founder Willis Johnson and evolved through consistent strategic pivots, most notably its early embrace of technology. By 2003, Copart had migrated fully to an online auction model powered by its proprietary VB3 platform. This shift catalyzed its growth, positioning it as the undisputed leader in online salvage vehicle auctions. Today, Copart operates across 11 countries, transacting over 3.5 million vehicles annually, and catering to a diverse customer base—from insurance companies and banks to exporters and dismantlers.
The company’s consignment model, which constitutes 86% of its revenue, enables high-margin, asset-light operations. Insurance firms account for roughly 80% of vehicle volume, leveraging Copart’s efficiency in disposing of totaled cars. This creates a network effect where scale attracts more sellers, which in turn draws more buyers, reinforcing Copart’s dominance in a near-duopoly with Insurance Auto Auctions (IAA). Innovation is central to Copart’s edge, as seen in tools like Copart 360 for detailed imaging, IntelliSeller for auction optimization, and Title Express, which streamlines salvage title processing—each strengthening its competitive moat. Geographic expansion, both within North America and internationally, has unlocked new markets, while diversification into fleet sales and non-salvage vehicles adds incremental revenue streams and resilience.
What separates Copart further is its capital allocation discipline. The company generates over $1 billion in annual free cash flow and reinvests wisely. A significant portion of this capital goes toward land acquisition for its 150+ salvage yards, ensuring long-term scalability and inflation protection. Owning these urban-adjacent assets creates high barriers to entry. Copart also leads in technology investments that enhance platform stickiness, while maintaining a pristine balance sheet—holding $3.8 billion in cash against a mere $119.4 million in debt, translating to a virtually unleveraged capital structure. Though Copart doesn’t pay dividends, occasional buybacks and selective acquisitions, like Purple Wave for construction and fleet vehicles, signal thoughtful reinvestment into growth verticals. These capital decisions are reflected in the company’s financial metrics, boasting a 19.19% ROE and 13.26% ROIC, rare among asset-light platform businesses.