Trade-Ideas: Copart (CPRT) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Copart ( CPRT) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Copart as such a stock due to the following factors:

  • CPRT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.4 million.
  • CPRT has traded 147,584 shares today.
  • CPRT traded in a range 222.3% of the normal price range with a price range of $1.21.
  • CPRT traded above its daily resistance level (quality: 62 days, meaning that the stock is crossing a resistance level set by the last 62 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on CPRT:

Copart, Inc. provides online auctions and vehicle remarketing services. CPRT has a PE ratio of 23.6. Currently there are 3 analysts that rate Copart a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Copart has been 974,900 shares per day over the past 30 days. Copart has a market cap of $4.1 billion and is part of the services sector and specialty retail industry. Shares are up 11.3% year to date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Copart as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 16.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 43.04% is the gross profit margin for COPART INC which we consider to be strong. Regardless of CPRT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPRT's net profit margin of 15.66% compares favorably to the industry average.
  • COPART INC's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, COPART INC reported lower earnings of $1.40 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.40).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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