Having solid reasons to buy stocks is essential for informed investing. This helps align your investments with your financial goals. Whether you’re seeking to accumulate wealth in the long term or eyeing regular income, the purpose of investment must be clear.
With this backdrop, I’m buying goeasy (TSX:GSY) stock for a combination of value, income, and growth. Let’s delve into to explore the factors that bolster my optimistic outlook.
goeasy is a top-growth stock
goeasy is a prominent player in Canada’s non-prime lending industry. The company provides unsecured and secured loans through the easyhome, easyfinancial, and LendCare brands. In addition, it also offers lease-to-own merchandise options.
What stands out is goeasy’s strong growth. Its revenue has grown at a CAGR (compound annual growth rate) of 17.7% since 2012. During the same period, goeasy’s adjusted EPS (earnings per share) increased at a CAGR of 29.5%.
goeasy’s growth has been even better in recent years. Over the past five years, ending June 30, 2023, goeasy’s revenue has maintained an impressive CAGR of 19.44%. Concurrently, its EPS has shown remarkable growth, boasting a CAGR of 31.91%.
Despite the challenging macro environment, the momentum in goeasy’s business has sustained in 2023. It produced revenues of $590 million in the initial six months of 2023, representing a year-over-year growth of 22%. Additionally, goeasy’s bottom line has seen a substantial 15% increase during the same period.
The company highlighted that demand for loans remains high. The higher loan originations led by growth across the entire range of products and acquisition channels will likely drive its top line in the future. While its growing loan portfolio will support its top line, the stable credit and payment performance and operating leverage will cushion its bottom line. It’s worth highlighting that goeasy’s efficiency ratio improved significantly in the second quarter of 2023, supporting its margins and earnings growth.
Earn steady income from goeasy stock
Besides offering solid growth, goeasy is famous for enhancing its shareholders’ returns through higher dividend payouts. Notably, goeasy is a Dividend Aristocrat. It has paid a regular dividend for 19 years. Moreover, it increased its dividend for nine consecutive years.
The company’s solid financials and ability to grow earnings positions it well to boost its shareholders’ returns through higher dividend payouts. Further, it offers a decent dividend yield of 3.5% (based on its closing price of $110.23 on October 9). This makes goeasy a compelling stock to earn a steady income.
Bottom line
goeasy is a solid stock for investors seeking growth and reliable income. Its top and bottom lines continue to grow rapidly, enabling the company to enhance its shareholders’ returns. Long-term investors can create significant wealth by investing in goeasy stock. Further, one can earn a steady income along the way. Furthermore, goeasy stock is trading cheap, providing significant value near the current levels.
For instance, it is trading at the next 12-month price-to-earnings multiple of 7.3, which appears low given its double-digit earnings growth and a dividend yield of 3.5%.
