There are impressive operating margins in auctioning salvage vehicles -- and technology is paving the way to even higher margins. Copart (NASDAQ:CPRT), the largest provider of salvage disposition services in the U.S., reported that its latest quarter's sales rose 14% and net income blossomed 49%.

Same-store sales, the key measure of any retailer's health, were up a strong 13%. Helping deliver that sales increase was the use of online auctions. Of the quarter's sales, 46% were to buyers outside the state where the vehicle is located (and one in five was sold outside the U.S.). All of this good news has sent the stock soaring, up over 18% today.

Motley Fool Stock Advisor recommendation eBay (NASDAQ:EBAY) has pioneered auctions, and its lack of bricks-and-mortar retail assets allows it to deliver extremely high 33% operating margins. Get this: Copart's operating margins this quarter increased from 27% a year ago to 34%. Now that's impressive.

Virtual auctions are a "1 + 1 = More than 2" proposition. Previously, buyers had to be at an auction to bid. Now they can bid from anywhere in the world. With more buyers able to participate, bidding should be stronger. Plus, these same buyers can bid at any Copart facility auction. That brings more qualified buyers to every location's auction.

Another reason to be excited about Copart's virtual marketplace is the 10% rise in registered buyers over the last year -- to 43,000. That's a lot of bid-clicking capability. And the balance sheet shows $200 million in cash and no debt. That's extremely clean and a neat trick for a company with 107 facilities in the U.S. and Canada.

The company's stock is valued at 25 times analyst estimates for this fiscal year (which runs through July 31, 2005). Analysts expected earnings to grow 17% this fiscal year and 12.5% next year. But, the impact of virtual auctions on sales and margins will probably drive analysts to raise estimates.

Competitor Insurance Auto Auctions (NASDAQ:IAAI) is much smaller, with 8% operating margins and more debt than cash, and sells for 25 times earnings. With comparisons like that, it is no wonder that Copart is up 78% over the last 52 weeks. There is a bonanza in salvage and Copart has it.

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Fool contributor W.D. Crotty does not own stock in the companies mentioned.