The S&P/TSX Composite Index started yesterday’s trading session well before finishing the day in the red. Volatility has picked up in North American markets, as several factors are stirring investor anxiety. Policymakers will have their hands full in the weeks and months ahead, as it is still unclear what shape the post-COVID market and economy will take. Today, I want to discuss how investors may want to spend some extra cash in this environment. It is a good idea to take a hard look at one of the top growth stocks on the TSX in recent years. Let’s jump in.
The alternative lending industry is growing fast
goeasy (TSX: GSY) is a Mississauga-based alternative financial company that operates through three business units: easyfinancial, easyhome, and LendCare. Back in May, I’d discussed why goeasy was a great target due to its exposure to this fast-growing space. The COVID-19 pandemic put further strain on Canadian finances. goeasy offers non-prime borrowers a chance for more flexibility.
Unlike big banks, alternative lenders have been able to leverage technology and more flexible lending services to draw in clients. Cambridge University’s Judge Business School reported that global alternative finance volumes delivered 24% growth in 2020. This was an impressive feat in the face of major disruption. goeasy’s performance was in line with this trend.
goeasy is a growth stock that has richly rewarded its shareholders
Shares of goeasy have climbed 109% in 2021 as of close on September 29. The stock is up 209% from the prior year. Back in March 2020, North American stocks were reeling from the beginning of the COVID-19 pandemic. At the time, I’d suggested that goeasy was a top growth stock worth adding in the face of the crisis. Its shares fell below the $30 mark during the pullback. The growth stock closed at $202.41/share on September 29.
The company released its second-quarter 2021 results on August 5. Revenue rose 34% year over year to $202 million. Meanwhile, adjusted income rose 50% to $43.7 million, or 38% on a per-share basis to $2.61. goeasy’s loan originations jumped 122% from the prior year to a record $379 million. Its total gross consumer loan receivable portfolio increased 58% to a record $1.80 billion.
Revenues climbed 17% year over year to $373 million for the first six months of 2021. It is forecasting revenue growth between 24-27% for the full year. Moreover, it expects revenue growth between 17-20% in fiscal 2022 and 12-15% in fiscal 2023. This company is a top performer in this space and is on track for strong growth going forward.
This growth stock last had a price-to-earnings ratio of 14. That puts goeasy in favourable value territory.
One more reason to snag goeasy today
Unlike many top growth stocks, goeasy also offers income. It last paid out a quarterly distribution of $0.66 per share. That represents a modest 1.3% yield. The company has delivered dividend growth for seven consecutive years. Not only is goeasy a top growth stock, but it is also a Dividend Aristocrat.
