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

We came across a bullish thesis on Copart, Inc. (CPRT) on Andvari’s Substack. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc. (CPRT)’s share was trading at $53.67 as of 23^rd May. CPRT’s trailing and forward P/E were 35.54 and 30.03 respectively according to Yahoo Finance.

Copart’s Q3 2025 results set new all-time highs in both revenue and operating profit, yet the stock dropped over 10% the following day—perhaps due to slightly decelerated growth or a modest decline in margins from 38.8% to 37.3%. But the real story lies in Copart’s capital allocation and its ever-growing cash position. With nearly $4.4 billion in cash, zero debt, and an additional $1.3 billion in liquidity from its credit facility, Copart holds $5.6 billion in liquidity against a $52 billion market cap.

Despite this, the company continues to invest meaningfully in real estate, technology, and services for its global clients. The firm’s balance sheet strength, especially relative to its main competitor IAA (now owned by RBA Global and significantly leveraged), makes it the clear partner of choice for insurers—particularly in catastrophe scenarios like hurricanes. Copart’s ample cash allows it to respond quickly to natural disasters, acquiring land and resources well ahead of crises. Still, with capex ranging between $335 million and $640 million since 2019 and only two major acquisitions in a decade, the cash pile continues to grow—projected to expand by another $1.3 billion within a year.

Management, led by CFO Leah Stearns, maintains a long-term, high-return investment philosophy akin to Berkshire Hathaway’s, preferring patience and prudence over impulsive spending. While share repurchases and M&A are on the table, special dividends may be the more appropriate outlet for excess capital. Copart’s discipline stands in stark contrast to companies like CoStar, giving shareholders confidence in management’s stewardship—even as they wonder, “Do you have enough cash?”

Previously, we have covered Copart, Inc. in April 2025 wherein we summarized a bullish thesis by Bulls on Parade on Substack. The author highlighted Copart (CPRT) as a strong compounder with a dominant salvage auction model, disciplined capital allocation, and solid global growth. Despite its premium valuation, analysts saw moderate upside backed by strong cash flows and a debt-free balance sheet. Since our last coverage, the stock is down 11.8% as of 26^th May.

Copart, Inc. (CPRT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held CPRT at the end of the fourth quarter which was 48 in the previous quarter. While we acknowledge the risk and potential of CPRT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CPRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.