CPRT's revenue decline is mostly non-organic (hurricane comps), so the stock is underpriced and a good turnaround candidate if growth resumes.

Copart, the global auctioning platform for cars, is down big as well.

Next up we have Copart. This looks like a very dated logo. It almost looks like a logo from like the 1990s, back in the Blockbuster days. So, you might look at the company and think, "Ah, this this is a really old company."

But a lot of these type of companies actually have really good businesses, and Copart is one of them.

But basically, how Copart makes money is when a vehicle is totaled, the insurance company needs to do something with that vehicle. And the insurance company doesn't want to sell that vehicle directly.

They look for a partner that they can just offload that vehicle to, and have that partner deal with the vehicle. And that's exactly what Copart does. A vehicle is totaled, the insurance company trying to sell the wreck itself, it sends that vehicle over to Copart.

Copart stores the vehicle, lists it on its online auction platform, and sells it to dismantlers, rebuilders, used car buyers, exporters, and other buyers. So, Copart is an ancillary effort to an insurance company in getting rid of totaled or damaged vehicles.

And there's some important nuances here, like Copart usually doesn't own the total vehicle itself. It simply does all the logistics and the mechanics of getting rid of it, but they're not actually buying the vehicle itself.

They more or less charge service fees along the way. That makes the company a lot more attractive, as they don't have to hold the inventory costs of all these vehicles.

Now, the interesting thing about this company is it was priced as a very durable compounding machine that could grow double-digit revenue. So, investors would buy Copart expecting it to grow between 13 to 15% per year, like it had done in many of the years prior.

Investors had good reason to believe that this company would continue to grow like it has throughout its history, but then it just recently stopped. If you notice right here the long-term revenue, it seems to just have a ceiling.

The revenue stopped in just the past year. In fact, it literally has stopped growing. The revenue grew by less than 2%, which adjusted for inflation is not really growing at all.

Some investors are looking at the company going, "Huh, this used to grow super fast and now it's not growing at all. I'm bouncing out of this company. I want nothing to do with it."

And massive selling pressure has driven the price down approximately 50%.

But if we look at the actual story of what's going on with this company, it's not nearly as bad as it sounds. And there's reasons to believe that the revenue will pick up once again in the future.

We can first look at why the revenue stopped growing. Part of this was simply because of tough comps. The revenue was growing really fast in recent years, but that's because of huge hurricanes.

Hurricanes destroyed thousands of vehicles. Insurance companies had to pay out huge amounts. Those vehicles were all given to Copart, and then they were later auctioned off or disassembled.

In fact, when we do rough math and try to estimate how much of an impact the hurricanes had on the revenue decelerating to flat, it's estimated to be around 70% of the impact, meaning that only 30% of the revenue deceleration is organically based and not hurricane based.

So this visibly looks much worse than it actually is, meaning that the organic business is much healthier than what's being priced into the stock.

There are other factors playing into the decline of Copart today, like the fact that insurance has gotten much more expensive, a lot of people are not going for the comprehensive insurance, they're just going for liability, and those are factors that are likely to be priced and changed in the future as well. So some of this is also cyclical.

But the opportunity exists. If you believe that Copart can get back on track, it can resume normal steady high single digits or low double digit revenue growth, then the stock is most likely underpriced today and is a good candidate for a turnaround play.