David Hay — Friday POW!: Copart (CPRT) — salvage-auction compounder down ~45–55% at ~17× fwd P/E; fortress balance sheet ($4.2B cash, $5.5B liquidity), $1.6B YTD buybacks vs $27B cap, 80%+ high-margin service fees; rising auto-loan-delinquency tailwind + Jay Adair back as CEO Jul-31 (pick & core analysis by contributor Daniel Bustamante) (Jul 10 2026)

One-line take: This week's POW! pick is Copart (CPRT), rated a Positive / Buy for long-term compounder investors — the pick and core analysis come from Haymaker friend and frequent contributor Daniel Bustamante (not the usual Haymaker Team write-up). Copart is the leading global online salvage-vehicle auction & remarketing platform (total-loss, used, fleet, wholesale) — an asset-light intermediary that takes no vehicle ownership and earns 80%+ of revenue in high-margin service fees via its proprietary VB3 platform (275+ locations, 11 countries, since 1982). The stock is down ~45% from its highs (−55% since last April) on soft volumes, trading at a ~17× forward P/E, with a fortress balance sheet ($4.2B cash + HTM securities, $5.5B total liquidity, minimal debt) and $1.6B of YTD buybacks (43M+ shares) against a ~$27B market cap. Two catalysts: (1) a rising auto-loan-delinquency tailwind — the 90-day+ rate hit 5.6% in Q1 2026, the highest since 2010 (next data Aug 4) — driving more repossessions into Copart's growing non-insurance auction volume; and (2) Jay Adair returning as CEO on Jul 31 (Jeff Liaw steps down), the leader behind a 1,100%+ total return over his 2010–24 tenure. Technicals are ugly (needs to build a base in the mid-$20s; high-$20s an ideal long-term entry; a decisive break of $25 is a warning, ~$24 a reasonable stop/sell-down). Framed explicitly as "genuinely a long-term compounder," not a trade. The Buys/Trims/Holds/Sales portfolio tables were deferred to Monday's Portfolio Update.

1. Stocks & names mentioned

Ticker	Name	Research	View	What he said	At
CPRT	Copart	QT · SA · STK · FA	Positive	Pick of the Week — a long-term compounder on sale (pick and core analysis by contributor Daniel Bustamante). The leading global online salvage/used-vehicle auction & remarketing platform; asset-light intermediary earning 80%+ high-margin service fees via VB3 (275+ locations, 11 countries, since 1982; expanding — new Ireland ops center). Stock down ~45% from highs / −55% since last April at ~17× fwd P/E. Q3 FY2026: rev $1.237B (+2.1%), gross margin 46.3%, op income $464.3M (+2.8%), net income $402M; 9-mo rev $3.5B (flat), diluted EPS $1.20 (+1.7%). Fortress balance sheet: $4.2B cash+HTM, $5.5B liquidity, minimal debt; $1.6B YTD buybacks (43M+ shares) vs ~$27B cap. Tailwind: auto-loan 90-day+ delinquencies 5.6% (Q1 2026, highest since 2010) → more repos into non-insurance volume (next data Aug 4). Jay Adair back as CEO Jul 31 (1,100%+ return over 2010–24). Technicals ugly — wants a mid-$20s base for ~a month; high-$20s an ideal long-term entry; decisive break of $25 concerning, ~$24 a stop/sell-down threshold. "Genuinely a long-term compounder," not a trade.	read ↗

"View" is Haymaker's stance in this post. This week's pick and core analysis are authored by Haymaker contributor Daniel Bustamante. Referenced only (not tickers): Warren Buffett (on free cash flow as an intrinsic-value indicator), and the auto-loan-delinquency data series (next release Aug 4). Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.

2. Talking points

The setup — a compounder battered by soft volumes

Stock is "down 45% from its highs, battered by soft volumes and a market that forgot how to have fun." But buybacks are "as aggressive as ever," the balance sheet is "a literal fortress stuffed with cash," margins are "rock-solid," and "the long-term compounder thesis is still very much alive."
The one-line frame: "high-moat marketplace + recession-resistant tailwinds + dirt-cheap valuation." "The junkyard is interesting yet again."

The business — an asset-light salvage-auction toll booth

Copart is "the leading global provider of online vehicle auctions and remarketing services," specializing in salvage (total-loss), used, fleet and wholesale vehicles. It's an intermediary — it "does not typically take ownership of vehicles but earns high-margin fees for processing, storing, transporting, titling, and auctioning them" via its proprietary VB3 online platform. Founded 1982.
Sellers are "mainly insurance companies (for totaled vehicles), plus banks/finance companies, rental fleets, dealers, and others"; buyers are "dismantlers, rebuilders, exporters, and dealers worldwide." Global expansion is "a key theme in coming years."

The moat — scale, network effects, asset-light high ROIC

Platform / network effects: 275+ locations across 11 countries and a "massive global buyer network" create "superior liquidity and pricing power versus smaller competitors" (a new Ireland operations center is one 2026–27 expansion).
Asset-light, high-ROIC service model: "80%+ of revenue is high-margin service fees (not vehicle sales)," yielding strong earnings, low debt and heavy free cash flow.
Secular + cyclical hybrid: benefits from digitization of auctions and rising vehicle complexity/repair costs and from economic stress (more distressed supply). Plus a real-estate + tech hybrid — it owns strategically located, appreciating land paired with a scalable online platform. At its core, "a 'pick and shovel' play on auto-industry distress and insurance dynamics."

The financials — a cash-flow machine

Q3 FY2026: revenue $1.237B (+2.1% YoY), gross profit $572.6M (+3.7%), gross margin 46.3%, operating income $464.3M (+2.8%), net income $402M. Nine months FY2026: revenue $3.5B (roughly flat), diluted EPS $1.20 (+1.7%).
Balance sheet: "extremely strong" — $4.2B cash + held-to-maturity securities, $5.5B total liquidity, "minimal/no meaningful debt."
Buybacks: over $1.6B YTD (43M+ shares) — "meaningful relative to a $27 billion market cap" — management "purchase[ing] equity on the lows, not… at the peak." Margins high and expanding (gross ~46%, operating mid-30%s).

Catalyst #1 — rising auto-loan delinquencies (watch Aug 4)

US auto-loan delinquencies are at multi-year highs: the 90-day+ rate reached 5.6% in Q1 2026, "up significantly YoY and above prior peaks," and "has not been this high since 2010." The next data release is scheduled for August 4th — Haymaker will be "watching this number closely… along with the stock price reaction."
Mechanism: higher delinquencies → more defaults and repossessions by lenders → repo'd vehicles "consigned to auctions (non-insurance volume for Copart)," boosting the "meaningful and growing" non-insurance segment. A counter-cyclical volume boost that helps offset recent softness in insurance volumes.

Catalyst #2 — Jay Adair back as CEO (Jul 31)

Current CEO Jeff Liaw steps down July 31, 2026; Jay Adair returns to lead the company — "a net positive," because "the horse is only as good as the jockey."
Adair was CEO 2010–2024 (and rose through Copart from 1989, age 19). His main tenure delivered a 1,100%+ total return (more, split-adjusted), "dramatically outperforming the S&P 500," powered by the shift to online/VB3 auctions, international expansion, yard-network growth and rising total-loss frequency — "a classic compounder story."

Technicals — build a base first

The ~12-month drop is "serious… ugly… obviously of concern," but "understanding why… is key." Copart is "genuinely a long-term compounder," yet it "will need some time to build back a shareholder base" — ideally a base in the mid-$20s for a month or so, which would signal the narrative is changing.
For "longer-term, non-price-sensitive readers, high $20s still seems like an ideal place to begin looking." It sits near long-term support; "it would be quite concerning if $25 was decisively broken to the downside — $24 or so would be a reasonable stop-loss, or at least sell-down, threshold."

The bottom line

"In a market obsessed with the next shiny thing, Copart reminds us that sometimes the best opportunities look like yesterday's junk — especially when their rockstar CEO is back behind the wheel." A patient, long-term compounder bet, not a trade.
Note: "We will be posting our Buys, Trims, Holds & Sales tables in Monday's Portfolio Update edition" — so the portfolio-table changes are deferred (no portfolio.json update from this post).

3. In plain English

CPRT — Copart Positive

Copart runs the biggest online auction system for salvaged and totaled cars. When an insurer "totals" a wrecked vehicle, or a lender repossesses a car, someone has to sell it — and Copart is the marketplace where those cars get auctioned to dismantlers, rebuilders and exporters worldwide. The clever part is that Copart usually doesn't own the cars; it just takes a fee for storing, moving, titling and auctioning them on its VB3 platform. That makes it "asset-light": more than 80% of its revenue is high-margin service fees, so it throws off a lot of cash, carries almost no debt, and earns very high returns. With 275+ locations across 11 countries and a huge buyer network, smaller rivals can't match its liquidity — a classic "network effect" moat. (This week's write-up comes from Haymaker contributor Daniel Bustamante, not the usual team.)

The reason it's interesting now is that the stock has fallen roughly 45–55% from its highs on soft volumes, down to about 17× next year's earnings — cheap for a business this good. Meanwhile the company is sitting on $4.2 billion of cash (and $5.5 billion of total liquidity), and has spent $1.6 billion this year buying back its own shares — a big chunk of a $27 billion company, bought while the price is low. Two things could turn it around. First, Americans are falling behind on car loans at the fastest rate since 2010, which means more repossessions — and repo'd cars flow straight into Copart's auctions, boosting volume (the next data point lands August 4). Second, Jay Adair — the CEO who oversaw an 1,100%+ stock gain from 2010 to 2024 — is coming back to run the company on July 31. Bustamante calls this a genuine long-term compounder, not a quick trade, but wants to see the stock stop falling and build a base in the mid-to-high $20s first; a decisive drop below $25 (roughly a $24 stop) would be the warning sign that the thesis isn't working yet.

Summary derived from the paid Haymaker newsletter (text in transcript.txt); this week's pick and core analysis are by contributor Daniel Bustamante. For personal study. Not investment advice. © Haymaker / David Hay for source material.