Copart helps junked car sellers find good prices for their wares. That kind of customer satisfaction locks in supply agreements, which lead to future earnings. So far Copart has captured 35% of the U.S. market, and Cramer is expecting that to grow.
Now accident rates are on the decline in the States, so Copart got aggressive and bought Universal Salvage, the largest salvage company in the U.K. Universal has 25% of the market there with 10 locations, and Copart is planning to expand to 15 to 20 sites. Here’s another example – aside of lower costs – of Copart’s internet model allowing the company to grow internationally with ease.
Another thing that got Cramer going was Copart’s buyback. CPRT has 22 million shares left in its repurchase program. That’s 25% of the shares outstanding as of Sept. 28. Investors can enjoy the reassurance that Copart is there buying back stock during a decline to prop up the price and higher earnings per share overall.
Lastly, and this should be a good indicator of the company’s potential, the first insider buying since early 2004 took place after the stock spiked on last quarter’s earnings. This kind of confidence makes Cramer think there’s more upside to be had in CPRT.
CPRT has a huge buyback, international expansion and a business model that works, Cramer said. That’s why he thinks this stock is a buy.
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