Why Did goeasy Stock Jump 6% This Week?

The spring budget came in from our federal government, and goeasy stock (TSX:GSY) investors were incredibly pleased by the results.

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Shares of goeasy (TSX:GSY) surged this week, jumping 6% on opening on Apr. 16, yet no news had come out from the company itself. So, let’s look at what was going on with goeasy stock and why.

What happened?

Shares of goeasy stock climbed as the average recommendation from analysts came in at “moderate buy.” This was according to eight analysts, with six declaring it a buy and two others calling it a hold.

Not only that, an analyst came forward with new announcements that likely led to the surge in share price. As the federal budget looms closer, the analyst believes that this could be a catalyst for growth for goeasy stock.

The analyst upgraded the lender from a “neutral” position to “outperformed.” Remember, this is already on top of enormous growth for goeasy stock in 2024 as well. So, now, let’s look at what the federal budget has to do with goeasy stock.

Budgeting big

As the federal budget comes out, the analyst pointed out that the new measures were to “crack down on predatory lending.” Beyond that, the changes were minimal. And, importantly, the analyst did not see a further reduction to the maximum annual rate of interest allowed under the criminal code.

You might remember that this was reduced last year and led to a downgrade for goeasy stock from multiple analysts. This downgraded the company further in January, as there were discussions of a further reduction on the table for the interest rate cap. 

So, once the spring budget was released, investors were pleasantly surprised to see that there wouldn’t be a further reduction. And this would be an important de-risking factor for goeasy stock. In fact, further action looks very unlikely, leaving the company quite stable.

Very attractive

So, now, even after so much growth for goeasy stock, the company looks quite attractive. It’s highly unlikely any more changes would come down the pipeline given a federal election is looming for the future. Even then, it’s now down to the provinces to make any changes to interest rates, and that would be a huge, drawn-out process with the federal government.

goeasy stock trades in an attractive market with very limited competition. What’s more, it benefits as it holds a mature balance sheet with decades of experience behind it — all while having access to low-cost funding.

Therefore, not only does goeasy stock look like a valuable buy for growth in 2024. It looks like a strong, long-term hold for investors looking for a value compounder with very valuable fundamentals.

Shares of goeasy stock are now up 89% in the last year while still trading at just 12 times earnings. It offers a dividend yield at 2.69%, which is higher than its five-year average of 2.36% as of writing. And with a payout ratio of just 27%, not only does it look safe. It looks likely to climb in the near future as well. So, I would certainly add goeasy stock to your list of long-term growth and dividend stocks.

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 Amy Legate-Wolfe has positions in Goeasy. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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