goeasy (TSX:GSY) has been a rediscovered stock over the last few years that’s taken quite the hit. Coming around in the 1990s, the company first loaned home furniture and appliances. Since then, it’s expanded to an enormous loan operator.
So, let’s take a look at how much investors could have made in the last 20 years and whether that might happen again.
The numbers
If investors had purchased goeasy stock 20 years ago in 2003, shares traded back then at about $9 per share. This was right after the company consolidated shares back in 2002, creating a higher share price over all.
Even so, this brought attention to goeasy stock, as it now traded above $1 and could be brought onto the TSX today. And now, shares of goeasy stock trade at $125 as of writing. That’s an increase of 1,289% in the last 20 years!
Therefore, if you were to have invested $8,000 back then, that would have purchased 889 shares. This would mean today, those shares would be worth $111,125!
What happened during that time?
The big thing was the movement towards loan originations, which offered consumers more choice, especially in Canada. During the Great Recession, there was a need to find lower interest rates in a high interest rate environment. So, here came goeasy stock with lower interest rates compared to the bigger banks.
Even today that remains true, with goeasy stock offering lower rates even in this high interest rate environment. But it was also true when goeasy stock went through the pandemic, with Canadians seeking the lowest rate possible when purchasing homes at substantial lows.
Today, the company has remained incredibly resilient, posting incredible gains in loan originations. Yet shares have dropped since all-time highs. So, what does the future hold?
Can it happen again?
goeasy stock surged during the last two decades, and it’s not likely to see the huge increases that it once saw. This is because we now know the company is a strong loan originator, and it has been for some time. While this makes it a stable and resilient stock, it’s unlikely to be the growth stock that it was before the pandemic.
Even so, do not count goeasy stock out. The company’s earnings tell you why. Most recently, it reported record loan originations for the quarter. Furthermore, its loan portfolio grew 35% to $3.2 billion, with revenue up 20% to $303 million.
The quarter marked the 18th consecutive quarter of profit increases, the 19th year of dividend payouts and 9th consecutive year of dividend growth. It was a strong quarter, yet shares didn’t reflect that. Shares are down from 52-week highs, trading at 11.55 times earnings, putting it in value territory. What’s more, you can pick it up with a dividend at 3.09%.
Bottom line
While goeasy stock may not exactly surge in share price like it did during the pandemic, it certainly could surge once more. This comes from the company being a strong performer that’s proven its worth during the last few years.
Even during some of the most turbulent times, now included, it remains a strong loan originator and profitable company. Yet it seems investors have dropped the stock out of fear that it was overbought, which it was. Now, however, it seems oversold. So, it’s a great time for investors to get back on the stock, and grab a solid dividend while they’re at it.
