Over the past five years, stocks have faced several headwinds but also plenty of opportunities for the highest-quality companies to recover. That’s why it’s unsurprising that despite a higher-risk business model, goeasy (TSX:GSY) stock has thrived throughout the last five years.
In fact, if you had invested $1,000 in goeasy stock five years ago, your investment would be worth more than $4,400, considering that stock earned investors a total return of more than 343% throughout that stretch. That’s a compounded annual growth rate (CAGR) that’s upwards of 25%, showing what an unbelievably impressive stock goeasy is.
And while an impressive 343% gain in just five years sounds like smooth sailing for goeasy over the last five years, that couldn’t be farther from the truth.
How has goeasy stock performed over the last five years?
If you bought goeasy stock five years ago in March 2019, by early 2020, you would have already made a significant gain. In fact, by late February 2020, just before the pandemic, the stock had already jumped over 95% in just 11 months, as goeasy was and continues to be one of the most impressive growth stocks on the TSX.
When the pandemic hit, though, all of those gains and more were lost. In fact, by late March 2020, not only were all the gains lost, but your initial investment in 2019 would have been down by more than 45%.
This massive selloff was in large part due to the unprecedented nature of the pandemic but also the fact that goeasy’s business model is higher risk and could be significantly impacted by a widespread economic recession.
We now know that didn’t materialize, and soon after stocks bottomed in March 2020, they began a significant recovery rally. Then, in 2022, with surging inflation, rapidly rising interest rates and many expecting a recession in the near term, the stock sold off significantly again.
However, despite all the uncertainty in markets and the worry from investors that goeasy would be heavily impacted, these concerns never materialized. In fact, each time goeasy stock has sold off significantly, it rallied back even stronger than before.
goeasy is the perfect example of why you should invest for the long haul
When you invest for the long haul and put your money to work for years, inevitably, economic conditions will eventually worsen, and there will be significant concerns from the market about how many stocks will perform.
But as goeasy has shown us time and again, when you find a high-quality stock with tremendous long-term potential that you believe in, it’s essential to invest for the long run and ignore the short-term noise.
For example, if you had panicked and sold goeasy off in the early stages of the pandemic, not only would you have missed out on the massive gains it’s earned since then, but you would have also sold your investment at a significant, almost 50% loss.
This is why buying only the highest-quality stocks you believe in is essential, and committing to them for the long haul is paramount.
Investing for the long haul not only gives these stocks more time to achieve their sky-high growth potential, but it also allows you to mitigate short-term risks, such as the pandemic that came out of nowhere.
Why is goeasy one of the best stocks to buy and hold long term?
In addition to the impressive growth that goeasy has put up for years, which includes its revenue growing at a CAGR of 19.8% in the last five years and its normalized earnings per share growing at a CAGR of 31.9%, one of the most important reasons goeasy is a compelling buy is due to its ability to manage risk.
For years, as goeasy has rapidly expanded its loan book, you would expect that it would take on more risk to do so. However, that hasn’t been the case.
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In fact, throughout its impressive years-long growth streak, goeasy has managed to keep its charge-off rate well within its target range, leaving plenty of room for growth in its profitability.
So, it’s clear just how important it is to find high-quality stocks with tremendous long-term potential, but also how important it is to commit to these stocks for the long haul.
