Compound returns, often dubbed the “eighth wonder of the world,” have the magical ability to transform modest investments into substantial wealth over time. Even if you’re fashionably late to the investing party, embracing the power of compounding can still work wonders for your financial future. One mid-cap stock that exemplifies this potential is goeasy (TSX:GSY), a Canadian non-prime leasing and lending services company that’s been on an impressive upward trajectory.
The stock
Over the past decade, goeasy stock evolved from a modest leasing outfit into a financial powerhouse. In March 2015, its stock traded at approximately $20 per share. Fast forward to March 2025, and GSY shares are hovering around $155.08, marking a remarkable increase of over 675% in 10 years. This growth isn’t just a fluke. It’s the result of strategic expansion and a keen understanding of the non-prime credit market.
The company’s recent financial performance underscores its robust business model. In the fourth quarter of 2024, goeasy stock reported record loan originations of $814 million, a 15% increase from the previous year, bringing its total loan portfolio to $4.6 billion — 26% year-over-year growth. Total revenue for the quarter reached $405 million, up 20% from the same period in 2023, while adjusted net income rose by 12% to $77.4 million.
Investors have also enjoyed the fruits of goeasy’s success through consistent dividend increases. The company recently announced a 25% hike in its annual dividend, raising it to $5.84 per share from $4.68. This marks the 10th consecutive year of dividend growth, reflecting management’s confidence in sustaining profitability and rewarding shareholders.
Considerations
However, it’s essential to acknowledge the stock’s volatility. In the past year, goeasy stock’s share price has fluctuated between a high of $206.02 and a low of $153.31. Such swings are characteristic of mid-cap stocks but also present opportunities for investors to buy during dips and potentially enhance their returns.
Looking ahead, goeasy stock has ambitious plans. The company aims to expand its loan portfolio to between $7.35 billion and $7.75 billion by 2027, introducing new products and services to capture a broader market share. This forward-thinking approach positions goeasy to continue its growth trajectory, making it an attractive option for investors seeking long-term gains.
For those concerned about starting their investment journey later in life, goeasy stock’s performance illustrates that it’s never too late to benefit from compound returns. By reinvesting dividends and capitalizing on the company’s growth, investors can potentially accelerate their wealth accumulation.
Bottom line
Of course, no investment is without risks. The non-prime lending market can be susceptible to economic downturns, which may impact borrowers’ ability to repay loans. However, goeasy’s prudent risk management strategies and diversified product offerings help mitigate these risks, providing a buffer against potential challenges.
The power of compound returns remains a formidable force in wealth creation, regardless of when you start investing. Mid-cap stocks like goeasy stock offer a compelling blend of growth potential and resilience, making these worthy considerations for investors aiming to harness the magic of compounding. So, whether you’re a seasoned investor or just embarking on your financial journey, remember that the best time to plant the investment tree was years ago. The second-best time is now.
