Down by 27%: Is goeasy Stock a Good Buy in April 2024?

Some of the best growth stocks typically get inflated over time and slump much harder than their conservative counterparts. But it’s a positive from a discount perspective.

| More on:

Image source: Getty Images

While it has been on a recovery journey for some time now, goeasy (TSX:GSY) is still quite attractively discounted. It’s trading at a price 27% lower than its 2021 peak, even though it’s in a bull market phase. The discount is one of the reasons why its yield, which historically remained relatively low, is currently quite close to 3%. But is that enough to make it a good buy this month?

The company

goeasy is massive for an alternative financial company. Its number of branches and national footprint make it comparable to a small local bank, and it rose to this size by capturing a relatively underserved market: borrowers with low credit scores. The conventional banking industry ignores that significant population segment and is typically served by a discordant market of small lenders.

The company has captured this market and even allowed many clients to elevate their credit scores to healthy levels. However, a robust business model and a massive footprint are only some of the good things for this financial company.

The management team/insiders have confidence in the company, as evidenced by an unusually high number of insider owners: 21%. With them and institutions owning large chunks of the company, less than 60% of its shares are publicly held.

The last quarterly (and annual results) were quite encouraging as well. The company increased its annual diluted earnings per share by 23%. It also raised its payouts by a significant margin of 22%.

The stock

If we consider the long-term returns, goeasy is still one of the most promising stocks currently trading on the TSX. The overall returns in the last 10 years are roughly 1,000%, and despite the slump, the price appreciation in the previous five years alone is currently close to 270%. The recovery pace has been decent enough, and the stock has gone up about 66% in the last 12 months.

Considering this growth pace and the fact that it’s recovering, albeit not steadily, it is already a great pick, considering its former and current growth pace. But the reason it’s especially attractive right now is the combination of growth potential and dividends it’s offering.

The 3% yield may not look promising enough compared to other high-yield stocks trading on the TSX, but it’s a decent number considering the stock’s former yield.

Also, it’s one of the most generous dividend growers in Canada right now and has joined the rank of aristocrats. Buying now may allow you to get the best of both worlds: lock in a good yield (from the stock’s perspective) and capture a good part of the recovery-fueled growth.

Foolish takeaway

Considering its business model, history, and long-term potential, it’s a solid long-term pick and might do well in your Registered Retirement Savings Plan, but if you plan on leveraging its dividends for a passive-income stream, the Tax-Free Savings Account might be the right place to stash this holding.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A person builds a rock tower on a beach.
Dividend Stocks

CPP Pension: Boost Your Payouts by $5,232 per Year

You can raise your after-tax CPP by making RRSP contributions. Alimentation Couche-Tard (TSX:ATD) is a good RRSP stock.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

Here are three no-brainer stocks that are suitable for anyone getting started on their investing journey.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Top Dividend Stocks That Keep Raising Their Payouts

These three TSX stocks are ideal buy as they consistently raise their payouts, depicting their healthy financials.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

This 5% Dividend Stock Pays Cash Every Month

This monthly dividend stock offers cash every month, but also returns that continue to climb higher from being in a…

Read more »

Solar panels and windmills
Dividend Stocks

How Much Will TransAlta Renewables Pay in Dividends This Year?

TransAlta Corporation’s (TSX:TA) acquisition of TransAlta Renewables stock holds significant implications for income-oriented investors who previously held this monthly dividend…

Read more »

Dividend Stocks

3 Stocks That Can Help You to Get Richer in the Next 5 Years

Consistent growth stocks with a relatively bright future are one of the most trustworthy ways to grow wealth.

Read more »

Dividend Stocks

3 Blue-Chip Stocks Every Canadian Should Own

These Canadian blue-chip stocks are backed by well-established businesses and a growing earnings base, enabling them to generate above-average returns.

Read more »

grow money, wealth build
Dividend Stocks

Is This 7.25%-Yielding Dividend Grower the Ultimate Income Stock?

This top Canadian dividend stock has increased the distribution annually for nearly three decades.

Read more »