A healthy balance sheet, industry-leading return on asset, and long-term value creation team up with the right business model in a tariff-hit sector. The current sell-off has created an interesting trading opportunity, but is this the right time to buy?
Long Trade Idea
Enter your long position between 47.33 (the lower band of its horizontal support zone) and 49.54 (the upper band of its horizontal support zone).
Market Index Analysis
- Copart (CPRT) is a member of the NASDAQ 100 and S&P 500.
- Both indices are near record highs, but technical cracks flash warning signals, especially for non-AI companies, including a head-and-shoulders pattern, a reversal chart pattern.
- The Bull Bear Power Indicator of the NASDAQ 100 shows a negative divergence.
Market Sentiment Analysis
Following yesterday’s AI-led rally, where NVIDIA became the first company to top a market capitalization of $4 trillion, futures indicate another sell-off. US President Trump took another swipe at BRICS, especially Brazil, which threatened to retaliate against the 50% tariff. It also complicates the trade relationship with India, another member of BRICS. While AI-related companies push higher, the rest of the market shows more signs of technical weakness ahead. Optimism about tariffs and inflation appears excessively bullish, creating a backdrop for sharp corrections.
Copart Fundamental Analysis
Copart is an online auction platform for the automobile sector. It holds weekly and bi-weekly auctions for consumers and automotive companies. It is active in eleven countries, allowing buyers to purchase clean title vehicles due to its patented virtual auction technology (VB3).
So, why am I bullish on CPRT despite its recent share price collapse?
I am bullish because of its recent share price collapse, which was an overreaction to tariffs on the automotive sector. Copart has the best business model during this tariff uncertainty, as consumers may focus on used cars already in the country, unaffected by the tariffs. It should provide CPRT with a multi-year revenue boost and elevate its share price. It is also a free cash flow machine, and the options market also suggests institutional investors anticipate a massive price action reversal.
Metric | Value | Verdict |
PE Ratio | 31.55 | Bullish |
PB Ratio | 5.25 | Bearish |
PEG Ratio | 2.36 | Bearish |
Current Ratio | 8.16 | Bullish |
ROIC-WACC Ratio | Positive | Bullish |
Copart Fundamental Analysis Snapshot
The price-to-earning (PE) ratio of 31.55 makes CPRT a reasonably cheap stock. By comparison, the PE ratio for the NASDAQ 100 is 40.41.
The average analyst price target for CPRT is 60.69. It points to excellent upside potential, and my analysis suggests market outperformance.
Copart Technical Analysis
Today’s CPRT Signal
Copart Price Chart
- The CPRT D1 chart shows price action inside a significant horizontal support zone.
- The Bull Bear Power Indicator is bearish but shows a positive divergence with a pending bullish centerline breakout.
- Price action began a sideways trend, confirming recent support levels, and washing out most sellers.
- Underlying bullish conditions continue to improve, reinforcing a floor under CPRT.
- A breakout above the 38.2% Fibonacci Retracement Fan will catapult this stock higher.
My Call
I am taking a short position in CPRT between 47.33 and 49.54. The business model of Copart is ideal for a tariff-hit automotive sector, and this company is a free cash flow machine, allowing it to withstand economic shocks and invest in future opportunities as they arise. The recent panic-induced sell-off has created an excellent buying opportunity.
- CPRT Entry Level: Between 47.33 and 49.54
- CPRT Take Profit: Between 58.07 and 60.69
- CPRT Stop Loss: Between 45.50 and 46.21
- Risk/Reward Ratio: 5.87
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