goeasy (TSX:GSY) is one of the best Canadian stocks to buy now as it offers high growth and regular income. Additionally, its stock offers significant value near the current levels, making it a compelling long-term play.
With this backdrop, let’s delve into the reasons supporting my bullish outlook on goeasy stock now.
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goeasy poised to outperform the broader markets
goeasy is Canada’s leading non-prime consumer lender, offering unsecured and secured loans and point-of-sale financing. Operating under three distinct brands — easyfinancial, easyhome, and LendCare — the company delivers a comprehensive range of financial solutions.
Easyfinancial specializes in unsecured and secured personal loans, while easyhome provides consumers with a lease-to-own alternative. LendCare, serving as goeasy’s point-of-sale financing division, extends consumer lending and buy-now-pay-later financing options.
goeasy’s success is rooted in its diversified revenue streams, large subprime lending market, solid credit quality, and omnichannel offerings. These factors allow goeasy to deliver remarkable growth. It’s worth highlighting that goeasy has consistently achieved double-digit growth in both its top and bottom lines over the past decade, which significantly boosted the value of its stock.
For instance, goeasy’s revenue has a 10-year compound annual growth rate (CAGR) of 17.7%. Meanwhile, its adjusted earnings per share (EPS) increased at a CAGR of 29.5% during the same period. Notably, recent years have witnessed even more impressive growth, with its top line sporting a five-year CAGR of 19.62%. At the same time, its bottom line showed a CAGR of 31.85%.
The solid growth trajectory is evident in goeasy’s stock performance, which has surged by nearly 1,100% over the past decade. In the last five years alone, the stock experienced a CAGR of over 36%, generating an impressive total return of 369%.
Looking ahead, the momentum in goeasy’s business will likely be sustained, supporting the uptrend in its share price and enabling it to outshine the broader equity market. Factors such as high loan originations, stable credit and payment performance, and enhanced operational efficiency are expected to expand its top and bottom lines. Additionally, the company’s diversified funding sources and its product, channel, and geographic expansion strategy are anticipated to accelerate its growth rate further.
goeasy offers regular income
Apart from the potential for capital gains, investors can benefit from goeasy’s commitment to return higher cash to its shareholders. The company is a Dividend Aristocrat, implying it has increased its dividend for at least five consecutive years. To be precise, goeasy has been paying a dividend for 19 consecutive years. Moreover, it has grown the dividend for nine consecutive years.
Given the company’s ability to consistently grow its earnings at a solid pace, goeasy is fairly placed to boost shareholder returns through increased dividend disbursements. It currently pays a quarterly dividend of $0.96 a share, which translates into a respectable dividend yield of 2.4% (calculated based on its closing price of $159.45 on January 9).
Bottom line
goeasy’s robust growth potential and an emphasis on returning cash to shareholders make it an attractive choice for investors seeking both high growth and income. Moreover, goeasy is currently trading at a discounted valuation. For instance, it is trading at the next 12-month price-to-earnings multiple of 9.8, which looks cheap considering its high double-digit earnings growth and a dividend yield of 2.4%.
