Copart: One of the best businesses on Earth is being sold off, should you jump in?
A cash rich, very profitable, long term focused, opportunistic and resilient business is being sold off, should you jump in?
Welcome to the 31st investment case and 25th resilience idea on Crack the Market (and the most comprehensive Copart investment case you will find online)! Join me as I dissect one of the highest quality business on Earth and a core holding for many growth investors, one of the most cash rich business in the US, ideally positioned to ride the growing uncertainties in the world, which is currently being hotly debated between its wide moats (reinforced by property ownership and network effects) and positive secular growth drivers vs its valuation and growth headwinds.
This deep dive is part of a collaboration with Antoni Nabzdyk to breakdown Copart’s business, one of the most attractive in the world, and what has happened to the company’s share price this year. Be sure to check out his article as well!
Sorry for the lack of images and graphs throughout this deep dive, Copart unfortunately does not have investor presentations or material that could be used to illustrate the business, as it only publishes press releases. The podcast episode should be a more enjoyable way to discover the company, with the write up going into much more detail.
Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.
Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.
You can already read my first 30 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:
ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.
LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.
Atlas Copco (resilience, reshoring & China idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.
Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.
Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.
Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.
Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.
Roper (resilience idea): A resilient cashflow compounder in the software space with inflecting growth.
RELX (resilience idea): The company to own forever – one of the very best businesses on Earth.
CPKC (resilience & reshoring idea): The rail connecting Canada/US/Mexico and benefiting from reshoring.
Novo Nordisk (resilience idea): The most exciting pharma company in the world is misunderstood and its growth engine is ready to roar back to life.
Kurita (resilience, reshoring & China idea): Water services expert with improving margins and benefiting from reshoring of semiconductor production.
Halma (resilience idea): High quality compounder in safety, health and environmental technologies.
Quanta Services (resilience & reshoring idea): Countercyclical compounder riding a multi decade infrastructure buildout.
Infineon (China idea): Power semiconductor leader with strong structural drivers (AI power and China auto) amidst a cyclical recovery.
Hubbell (resilience & reshoring idea): Pure play on US electrification demand driven by AI and grid investment cycle.
Iberdrola (resilience & reshoring idea): Best integrated utility in the world with a stellar track record and solid growth driven by networks and renewables
Nvidia (AI & data center idea): The backbone of the AI world is unstoppable.
Veolia (resilience & reshoring idea): Resource management giant (water, waste, energy) due for a rerating.
TJX (resilience idea): The retail giant that keeps winning.
DSM-Firmenich (resilience idea): The diversified ingredient powerhouse benefiting from a transformational deal.
Zoetis (resilience idea): Leader in animal healthcare.
Prysmian (reshoring idea): Global cable leader entering a golden age.
Bentley Systems (resilience & reshoring idea): The software compounder bringing infrastructure into the AI age.
Givaudan (resilience idea): The highest quality and most resilient ingredient compounder has a compelling valuation.
First Solar (reshoring idea): The rising Sun in a new electricity supercycle.
Arcadis (resilience & reshoring idea): An engineering and design consultancy giant poised for a rerating.
Thermo Fisher (resilience & reshoring idea): Life Science tools giant just had its clearing event and is a stealth reshoring winner.
Nexans (reshoring idea): Electrification pure play with visibility into 2030.
Croda (resilience idea): A covid darling with a ridiculous valuation is at an inflection point
After reading this article, you will understand why this company is truly a one of a kind business, what it does, how it is riding an ultra long structural tailwind, why it is so defensive and has an exceptional track record thanks to its legendary founder and aligned management, why it is being so debated in the markets and has derated so much, and why it remains one of the very best businesses to own for the next decade.
In this article I go through:
Copart’s business as a platform to find the highest and best use for each totaled car.
Why the salvage auction business is one of the most attractive in the world and why Copart has such wide and strong moats.
How the company’s unique and entrepreneurial culture has allowed it to compound its shareholders’ capital for so long, being a Rule of 40 business for the last decade.
Why investors are suddenly rethinking the valuation and debating the short term outlook.
Why the business still benefits from many tailwinds and will continue to outperform.
Copart Investment Case
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