Momentum Stock: Copart Inc

Copart Inc is a global leader in online vehicle auctions and a provider of vehicle remarketing services. The company offers a platform that enables buyers to bid and purchase salvaged and used vehicles through online auctions. Copart operates a network of more than 200 locations in the United States and around the world, facilitating the sale and distribution of vehicles for a wide range of customers, including insurance companies, dealerships, rental car companies, and individual sellers. The company's platform provides a convenient and efficient way to buy and sell vehicles, offering a broad selection, transparent pricing, and streamlined logistics.

Price Performance:

Copart Inc has shown impressive price performance across various timeframes. In the short term, the stock has experienced strong growth, with a 7.77% increase in the current trading session, a 10.31% increase over the week, and a significant 13.53% increase over the past month. Over longer periods, the stock's performance is even more remarkable, with a 35.50% increase over the past six months, a 43.90% increase year-to-date, and a staggering 218.05% increase over the past five years. The stock has demonstrated consistent upward momentum, driven by positive market sentiment and strong financial performance.

Relative Strength Index (RSI):

The Relative Strength Index (RSI) for Copart Inc is currently at 85.78. The RSI is a technical indicator that measures the speed and change of price movements. A value above 70 typically indicates an overbought condition, suggesting that the stock may be due for a pullback or consolidation. Investors should consider this high RSI reading as a potential warning sign and exercise caution.

Financial Highlights and Valuation:

Copart Inc has a market capitalization of $39.28 billion. The company has generated $3.67 billion in revenue over the trailing twelve months, with a profit margin of 29.45%. The earnings per share (EPS) for the most recent quarter was $2.22. The company's valuation metrics include a trailing P/E ratio of 36.94, a forward P/E ratio of 25.51, a price-to-sales ratio of 8.05, and a price-to-book ratio of 6.13. These valuation metrics suggest that the stock may be trading at a premium compared to its industry peers.

Analyst Ratings:

Copart Inc has received an average rating of 4.11 from analysts. Out of the analysts covering the stock, 4 rate it as a "Strong Buy," 2 rate it as a "Buy," and 3 rate it as a "Hold." No analysts currently recommend selling the stock or rate it as a "Strong Sell." The average target price for the stock is $81.29. This indicates a potential downside of approximately 9.80% from the current price. While the majority of analysts have a positive outlook on the stock, investors should carefully evaluate the analysts' research and consider their own investment objectives before making any decisions.

Institutional Holdings:

Institutional investors hold a significant portion of Copart Inc's shares, with 83.395% of the shares being held by institutions. The top institutional holders of the stock include Vanguard Group Inc, BlackRock Inc, Principal Financial Group Inc, AllianceBernstein L.P., and State Street Corporation. These institutions have made changes to their positions in the stock, both increasing and decreasing their holdings. Vanguard Group Inc, for example, increased its shares by 778,398, while BlackRock Inc decreased its shares by 484,972. The buying and selling activity of institutional investors can provide insights into market sentiment and potential trends for the stock.

Insider Transactions:

There have been several notable insider transactions involving Copart Inc. Matt Blunt, a company insider, sold 30,000 shares on February 22, 2023, at a price of $69.36 per share. Another transaction involving Matt Blunt occurred on June 6, 2022, where 10,000 shares were sold at $115.72 per share. Additionally, Daniel J. Englander, another insider, sold 80,000 shares on May 25, 2022, at a price of $110.78 per share. These insider transactions indicate that company insiders have been selling their shares, which could be seen as a cautious signal.

Outlook:

Copart Inc is a leading player in the online vehicle auction and remarketing services industry. The company has shown impressive stock performance, with significant gains over various timeframes. However, investors should be mindful of the high RSI, which suggests an overbought condition. From a valuation perspective, the stock appears to be trading at a premium compared to industry peers. Analyst ratings are generally positive, with a majority recommending a "Strong Buy" or "Buy." Institutional holdings are significant, indicating confidence in the company. However, recent insider transactions involving share sales by company insiders may raise some concerns. Overall, investors should conduct thorough research, consider their risk tolerance, and evaluate the stock based on their individual investment goals before making any decisions.

In terms of any kind of short term entry, I would want to wait for a significant pullback especially after todays massive jump on earnings. Once it does pull-back, given how strong its earnings reaction was, it might continue its run for a while. For risk management, a trailing stop loss of around 8% to 10% would have kept you in most of this trade which is nice and low. If it broke below that it could have been a good sign to exit and look for a new entry when the trend resumed.

As always how you interpret and decide to act on any results is up to you. This is just data not financial or trading advice and past performance is in no way any guarantee of future performance. Think of it as a way to spot stocks you might be interested in and can add to your watch list and perform further research on and or discuss with your broker.

Again. Not trading advice. Industries and companies change. Trends can end. Do your own research / discuss it with your advisor, but might be one to watch.

Comment:

Hasn't had a big pullback yet. Small move to the upside.

Comment:

Only a small pullback so far and still looking extended, but given Carvanas massive 60% move today it might consolidate here and try and move higher. Have to wait and see what happens.

Carvana hit the afterburners today!