Used car auctioneer Copart's Relative Strength (RS) Rating got an upgrade from 77 to 82 Tuesday. That 82 RS rating puts Copart stock in the top 20% of all stocks, a bullish indicator. Research shows that the top-performing stocks often have an RS Rating north of 80 in the early stages of their moves.
Copart Stock Boasts Strong Ratings, But Needs Work
Dallas-based Copart boasts strong ratings in general. Its 89 Earnings Per Share Rating puts it in the top 11% of companies for profit growth. It also has an 89 Composite Rating and a superb A SMR Rating (sales+profit margins+return on equity) on an A-to-E scale with A tops. One yellow flag is its D- Accumulation/Distribution Rating. The D- rating shows that institutions like mutual funds are selling more than buying its shares.
Perhaps that's in part because its earnings growth has slowed over the past four quarters, from 38% to 7% to 10% and then to a 4% year-over-year drop last quarter, to 51 cents per share. Sales growth slowed over that period too, though it remained positive all four quarters. Sales grew 41%, 28% and 18% and then 10%, to $893.4 million last quarter.
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However, investors are showing confidence in the stock. Copart stock dropped to a 51.10 low on June 16. It's been trying to recover and closed Tuesday at 60.25, down a small fraction for the day but up about 20% from the June low. Its stock formed a cup base from August to November, when it began forming what looked like a handle. The handle has grown very long though and now is not an ideal time to jump into Copart since it isn't near a proper buy zone. See if the stock manages to establish and enter a buying range in heavy volume.
Copart stock holds the No. 3 rank among its peers in the Retail/Wholesale-Auto industry group. Genuine Parts and O'Reilly Automotive are also among the group's highest-rated stocks.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
IBD's unique RS Rating identifies technical performance by using a 1 (worst) to 99 (best) score that identifies how a stock's price action over the last 52 weeks matches up against that of all other stocks.
