When we think of hot stocks, NVIDIA (NASDAQ:NVDA) often comes to mind, with its skyrocketing growth fuelled by demand for artificial intelligence (AI) chips. However, investing in NVIDIA now might be daunting because of the overwhelming hype surrounding it. Often, hype can drive up prices, creating inflated expectations that may not always be met. Enter Propel Holdings (TSX:PRL), a Canadian fintech stock that’s thriving with growth, stability, and a forward-thinking business model — all without the frenzied attention NVIDIA gets.
Investing in AI
NVIDIA’s meteoric rise in the stock market can be partially attributed to AI advancements. As exciting as this is, the stock price has surged to a point where some investors may wonder if they’ve missed the boat. High valuations can put pressure on the stock to keep meeting and exceeding these lofty expectations. Plus, when a stock is as hyped as NVIDIA, it often attracts a wave of investors chasing returns. This can lead to increased volatility if these investors start pulling out at any sign of slowed growth.
In contrast, Propel Holdings flies under the radar, though it holds a strong growth story of its own. Propel is a fintech company focused on consumer lending. It has shown impressive financial results, with a quarterly revenue growth of nearly 49% year over year and earnings growth of 95%. Propel’s business model is designed to bridge a gap in the financial market by providing access to credit for underserved consumers through an AI-powered lending platform. This niche allows Propel to carve out a valuable space in the Canadian lending market, without facing the intense competition that tech giants like NVIDIA contend with globally.
Strength
A key strength for Propel is its exclusive partnership with KOHO, a leading Canadian fintech platform. Through this partnership, Propel’s lending services are seamlessly embedded within KOHO’s app, providing KOHO users access to credit options directly through a trusted digital platform. This partnership not only expands Propel’s reach. It also strengthens its position in the Canadian fintech landscape. This positioning will allow it to capture more market share without the need for relentless marketing or sensationalized headlines.
Propel’s recent earnings reveal a company with strong fundamentals. With a profit margin of over 10% and a return on equity of 36.84%, Propel demonstrates profitability and efficient use of shareholder equity. Its forward price-to-earnings (P/E) ratio is 7.13, a notable contrast to NVIDIA’s sky-high valuation. Thus, Propel is an appealing investment for those who value solid earnings at a reasonable price.
Growth potential
Another reason Propel is exciting is its growth potential within Canada. Unlike NVIDIA, which faces saturated markets and fierce global competition, Propel operates in a relatively untapped niche within Canada’s fintech sector. The KOHO partnership is expected to launch fully by the end of 2024, giving Propel even more exposure and reach in the consumer credit space. This kind of organic growth model powered by partnerships and expanding market reach is often more sustainable.
Propel’s stock performance has also been compelling. Its market cap has steadily increased, moving from $295.54 million in mid-2023 to over $1.2 billion as of June 2024. Despite this, it maintains a price-to-book ratio of around 7.26, which is manageable compared to many tech giants. Propel also pays a dividend with a forward yield of 1.58%, a rare feature for growth-focused tech companies, adding a layer of stability for long-term investors.
Bottom line
While NVIDIA’s AI dominance is an exciting story, Propel offers a refreshing alternative for those seeking growth without the hype. Its business model aligns well with long-term consumer trends in fintech. And its financial performance shows a company that is not only growing but doing so sustainably. Propel’s stock may not be making headlines like NVIDIA. Yet, for discerning investors, it provides a unique opportunity in a high-growth sector with a reasonable valuation.
If you’re looking for a hot stock that’s making waves without the price tag or hype of NVIDIA, Propel Holdings might just be what you need. Its solid fundamentals, promising future outlook, and innovative partnerships make it an enticing choice for investors seeking growth in the fintech space. And with a focus on sustainable growth and accessible credit, Propel is well-positioned for long-term success.
