If you’re looking to invest $500 for the long haul, consider allocating it to a stock with a proven track record of success: goeasy (TSX:GSY). This leading Canadian non-prime credit lender has made waves in the market, boasting impressive gains that have outperformed many peers. Let’s explore why goeasy could be your ticket to serious wealth accumulation.
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Unstoppable growth: A decade of returns
Over the past decade, an investment in goeasy stock has skyrocketed by over 900%, effectively multiplying investors’ money by 10 times! This remarkable performance starkly contrasts with the Canadian stock market’s return of 121% during the same period, represented by the iShares S&P/TSX 60 Index ETF. While past performance is no guarantee of future results, such a track record often indicates a resilient business model poised for further growth.
GSY and XIU Total Return Level data by YCharts
However, it’s crucial to consider the dynamics of growth stocks. A comparison between goeasy stock and the BMO All-Equity ETF highlights the volatility that could come with a single high-reward investment. Although goeasy has delivered slightly better returns since the exchange traded fund’s inception, the fluctuations in its stock price have been considerably more pronounced. This means that while the potential for profit exists, investors must be prepared to weather some storms.
GSY and ZEQT Total Return Level data by YCharts
For those who can handle this volatility – and perhaps even capitalize on market dips to acquire more shares – goeasy presents an appealing opportunity. Its fundamentals show a company that is not just surviving but thriving in a competitive landscape.
Strong financial performance: Numbers don’t lie
The first half of this year has been particularly promising for goeasy. Loan originations surged by 18%, totalling $1.5 billion, while the consumer loan receivable portfolio expanded by an impressive 29%, reaching $4.1 billion. These figures signal a growing demand for its financial products, which is further supported by a 25% increase in revenues, amounting to $735 million. Additionally, operating income soared by 34% to $285 million, showcasing robust profitability.
Adjusted earnings per share climbed 24% to $7.94, while the return on equity hit an impressive 22.6%. These strong financial indicators highlight not only goeasy’s effective business strategies but also its ability to adapt to changing market conditions. As the company continues to expand its reach, investors can remain confident in its growth trajectory.
Founded in 1990, goeasy has served over 1.3 million Canadians, continually diversifying its offerings to meet customer needs. Its strategic acquisitions have only strengthened its market position, allowing it to offer a variety of financing solutions, from unsecured and secured personal loans to point-of-sale and automotive financing.
Diverse offerings: A comprehensive financial solution
One of the key factors driving goeasy’s success is its diverse range of financial products. Its easyfinancial division specializes in providing unsecured loans tailored to individual needs, featuring personalized rates and payment terms. For homeowners, goeasy offers secured personal loans with rates starting at 9.9%, an attractive alternative to the average credit card rate of around 20%.
Moreover, the acquisition of LendCare in April 2021 has been a game-changer. LendCare facilitates point-of-sale financing through a network of over 6,200 merchants, enabling customers to finance various purchases, from powersports products to healthcare procedures. Additionally, LendCare’s automotive financing service is available through a robust dealer network of more than 3,300 partners.
Lastly, goeasy’s easyhome retailer operates 144 locations, including 34 franchise stores and an e-commerce platform, offering brand-name household furniture and electronics through lease-to-own agreements. This comprehensive suite of services positions goeasy as a one-stop shop for various financing needs.
The Foolish investor takeaway
At approximately $177 per share, analysts currently assess goeasy stock as undervalued by around 22%. The stock starts with a dividend yield of 2.6%, and investors can look forward to increases in its dividend over time. As the financial landscape evolves, goeasy is ready to capitalize on emerging opportunities, making it a compelling choice for your $500 investment.
