Market turbulence often masks hidden gems — especially in fintech, where innovation thrives amid uncertainty. With tariffs sparking volatility in early 2025, Propel Holdings (TSX:PRL) stock emerges as a standout Canadian technology investment opportunity. Down 40% from recent highs, this artificial intelligence (AI) powered lender blends hypergrowth, undervalued metrics, and macroeconomic resilience. Here’s why deploying $11,500 into PRL stock could reshape your long-term growth portfolio.
The Propel Holdings stock advantage: AI meets scale
Propel Holdings’s artificial intelligence platform disrupts traditional lending by serving consumers overlooked by banks — a market with potentially 90 million clients across North America and the United Kingdom. The low-credit-rated borrowers that traditional banks reject are a lucrative high-yield loans market for Propel and its underwriting partners. The company grew revenue by a staggering 42% in 2024, marking three consecutive years of 40% plus growth rates. Operating earnings have grown at a faster clip, with margins climbing, while adjusted return on equity (ROE) hit an eye-popping 48% during the past year, reflecting ruthless capital efficiency.
The engine propelling Propel Holdings’s explosive earnings growth is its operating leverage. As loan volumes scale, fixed costs like AI infrastructure dilute, driving profitability. Operating margins ballooned from 12.5% in 2021 to 21.4% in 2024 — a trend management expects to accelerate going forward.
For four consecutive years, the Canadian fintech stock has been a very good business to own as revenue strides powered strong earnings per share growth.
PRL Revenue (TTM) data by YCharts
Propel Holdings is growing its distributable income with investors through dividend increases. Management has raised dividends by 74% during the past three years. Current payouts should yield 2.7% annually.
Thriving in tariffs chaos and international expansion
Unlike industrial sectors significantly rattled by tariffs, Propel might not be that directly exposed to tariffs and its business model may thrive in uncertainty. Chief Executive Officer Clive Kinross recently noted on the fourth-quarter earnings call last month, “Banks tighten lending during downturns, pushing borrowers our way.” Over 90% of revenue stems from the U.S., where unemployment sits low at 4.1%, wage growth outpaces inflation, and a business-friendly regulatory shift underpins fintech growth.
Propel Holdings’s recent U.K. acquisition, QuidMarket, adds another growth layer. Targeting 20 million underserved consumers in a credit-starved market, QuidMarket is poised for strong revenue growth in 2025. Early integration is ahead of schedule, with plans to deploy Propel’s AI tools in the new market to replicate North American success.
Propel Holdings stock’s valuation: A steal for a growth juggernaut
Despite its multi-year momentum, PRL stock trades at a forward price-to-earnings (P/E) multiple of 7.5 and a forward price-to-earnings-to-growth (PEG) ratio of 0.4 — numbers more typical of fading industries than a company doubling earnings. This disconnect reflects misplaced fears over tariffs and rate cuts, creating a rare bargain.
Management’s 2025 targets reinforce optimism. They include revenue of US$590-650 million (31-45% growth), adjusted earnings before interest and taxes, depreciation, and amortization (adjusted EBITDA) margins expanding to 26-30%, and a 10% dividend hike in 2025 — a testament to robust cash flow generation capacity this year.
Deploying $11,500: Why I’d consider going all-in on PRL
This allocation hinges on three pillars.
First is growth at a discount: Few tech stocks with +40% revenue growth trade below 10 times earnings, yet PRL stock sits at 7.5.
Second is AI as a moat: Propel Holdings’s proprietary algorithms adapt to economic shifts, keeping loan-loss provisions at their lowest since 2020.
Third is global scalability: While North America drives Propel’s profits, U.K. expansion and high-margin “Lending-as-a-Service” partnerships (white-label solutions for third parties) unlock new revenue and earnings growth opportunities.
Risks do exist, though. Regulatory shifts like Canada’s 35% interest rate cap or potential QuidMarket integration snags come to mind. However, Propel’s U.S. concentration (90% of revenue) and diversified products buffer these threats.
That said, diversifying your investments across more stocks and asset classes will dampen portfolio risks.
The Foolish bottom line
Propel Holdings isn’t just a fintech stock — it’s a blueprint for the future of finance. By democratizing credit through AI, it’s positioned to thrive as traditional lenders retrench. Trading at a fraction of peers like Affirm or Upstart, PRL offers explosive upside with a built-in margin of safety. For investors eyeing high-growth tech stocks to buy in 2025, this is the revolution worth betting on.
