Is Copart, Inc. (CPRT) A Good Stock To Buy Now?

Is CPRT a good stock to buy? We came across a bullish thesis on Copart, Inc. on The Fat Pitch’s Substack. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc.'s share was trading at $33.74 as of April 21st. CPRT’s trailing and forward P/E were 21.23 and 20.04 respectively according to Yahoo Finance.

Copart (CPRT) operates as the dominant player in the global salvage auction industry, and its most powerful competitive advantage stems from owning approximately 90% of its land, a scarce and highly strategic resource required to store totaled vehicles during the auction process. In contrast to competitors such as IAA, which relies heavily on long-term leased yards with renewal cycles, CPRT’s ownership model eliminates recurring rent expenses and materially reshapes its cost structure.

This structural difference explains why CPRT has consistently delivered operating margins above 30% and a 10-year average of roughly 36%, an exceptional level for an industrial-like business. Lease-based models like IAA incur ongoing rental obligations and shorter depreciation schedules on improvements, whereas CPRT capitalizes land on its balance sheet and depreciates only buildings and equipment over 15–39 years, significantly lowering annual expenses.

When adjusting CPRT’s financials as if 100% of land were leased, the implied core operating margin still remains strong at approximately 28%, but this reveals that nearly 1000bps of margin advantage is directly attributable to its land ownership strategy. Even after normalization, CPRT continues to outperform IAA, which has averaged around 22% operating margins over five years. Beyond accounting effects, the cash flow quality is superior, as land purchases convert inflation-hedged real assets into retained earnings, while lease payments permanently exit the system.

This structure also embeds an inflation hedge, since CPRT’s land cost is fixed historically while rental markets continuously rise, unlike IAA which must absorb higher lease renewals regardless of business cycles. As a result, CPRT’s moat compounds over time as land scarcity intensifies, reinforcing both pricing power and long-term free cash flow resilience. Overall, this structural advantage continues to widen the gap versus competitors and positions CPRT as a durable, high-quality compounder with enduring shareholder value creation.

Previously, we covered a bullish thesis on Copart, Inc. (CPRT) by Andvari’s Substack in May 2025, which highlighted strong Q3 results, a $5.6B liquidity position, and disciplined capital allocation despite market volatility. CPRT’s stock price has depreciated by approximately 37.13% since our coverage. The Fat Pitch shares a similar view but emphasizes CPRT’s land ownership moat driving 1000bps margin advantage and superior inflation-hedged cash flow resilience versus IAA.

Copart, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held CPRT at the end of the fourth quarter which was 59 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 time frame. If you are looking for an AI stock that is more promising than CPRT and that has 10,000% upside potential, check out our report about this cheapest AI stock.