Buy Copart Stock. It’s a Smart Bet on Salvaging Crashed Cars.

One man’s trash is another man’s treasure. For proof, look no further than Copart, the world’s largest auctioneer of salvaged vehicles. Its stock looks like a gem, too. 

Copart (ticker: CPRT) trades in junked cars. Those range from wrecks that still have value as a source of parts to near-perfect cars that are simply uneconomical to fix but can be driven legally overseas. Insurance companies—eager to recoup payouts to drivers—sell these vehicles to willing buyers around the world through Copart, which takes a fee based on the sale price. It’s a steady business, one that has grown consistently over the years. 

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That much is obvious from Copart’s stock. Shares have jumped more than 50% this year, bolstered by another in a long string of upbeat earnings reports. For Copart, it doesn’t matter if used-car prices are falling, as they have been. Its fees are variable, depending on a vehicle’s selling price, and price declines have been offset by increased sales volume. The fact that it operates in a virtual duopoly with IAA—was acquired by RB Global’s (RBA) Ritchie Bros. in March—while likely gaining market share globally also provides plenty of visibility into its business.

“It’s an absolutely necessary part of the auto-insurance ecosystem,” says Stephens analyst Daniel Imbro. “(It’s also) a fantastic, high-quality, compounding growth company.”

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