After a rollercoaster of a year for stock market investors, 2023 looks like it will end on a strong note. Since the end of October 2023, the S&P/TSX Composite Index has gained significant momentum. As of this writing, the Canadian benchmark index is up by a whopping 10.83% from its October 27th level.
The upward momentum makes it more tempting to be hopeful for a bull market in 2024. Several high-quality stocks are attractive investments right now—some for growth potential, others for value, and many for income. Today, I will discuss goeasy (TSX:GSY), a stock arguably offering all three in an excellent combination.
Let’s take a closer look at the stock to help you determine whether it warrants a place in your self-directed portfolio leading into 2024.
Solid growth stock
goeasy is a $2.64 billion market capitalization, Mississauga-based alternative financial services company. In Canada, goeasy is the go-to provider of loans for non-prime borrowers, offering secured and unsecured loans. Due to growing economic pressure, many people who cannot qualify for loans from traditional lenders increasingly rely on lenders like goeasy.
The massive subprime lending market in Canada allows goeasy stock to generate significant cash flows. It is a well-managed company with diversified sources of funding and excellent underwriting and credit practices. Its successful business model has led to several years of revenue growth and profitability, in turn, growing shareholder value.
Between 2012 and 2023, goeasy has seen its revenue grow at a compound annual growth rate (CAGR) of 17.7%. In that time, its earnings per share (EPS) has grown by a CAGR of 29.5%. The first nine months of 2023 saw the company’s loan originations grow by 15% compared to the first nine months of 2022.
The company’s efficiency ratio also jumped by 320 basis points in the same period. Considering the healthy growth in its loan origination volumes, goeasy stock is likely looking at steadily growing cash flows through credit and payment volumes.
Income and value
goeasy stock might not offer unusually high-yielding dividends, and it is not a Canadian Dividend Aristocrat. However, it has been paying its investors their shareholder dividends for almost two decades.
The company’s growing revenue and earnings have allowed the management to enhance shareholder value through consistent dividend hikes for the last nine years. While it is not a Canadian Dividend Aristocrat yet, it looks well on its way to getting there.
The company’s ability to grow its earnings and its solid business model can make it an attractive stock to consider for income-seeking investors. As of this writing, it trades for $159.33 per share, paying its investors their payouts at a 2.41% dividend yield.
Beyond its track record for growth and dividends, goeasy stock is arguably a good value bet. At current levels, it has a 9.61 times forward price-to-earnings ratio. With its historical price-to-earnings ratio of 12.2, it is attractively priced despite being up by 50% year to date.
Foolish takeaway
goeasy stock can be an excellent investment for those seeking reliable income and solid growth. Investing in its shares and holding onto them for the long run can provide you with substantial long-term wealth growth.
