When a proven growth stock falls over 20% from its highs, many investors get nervous. But I get interested. goeasy (TSX:GSY), a leading Canadian non-prime lender, is currently down 23% from its 52-week high of $206. While many are quick to dismiss it amid recession fears and geopolitical tension — including a new round of U.S. tariff risks — I see this pullback as a compelling buying opportunity.
Here’s why I’m seriously considering putting $5,000 into this misunderstood financial powerhouse.
A decade of exceptional returns
Volatility isn’t new for goeasy. Since its founding in 1990, the company has weathered all kinds of market conditions — and rewarded long-term investors handsomely. In the past decade alone, goeasy has delivered a jaw-dropping 25% annualized return, turning a $1,000 investment into more than $9,400.
This level of compounding is no accident. It was driven by earnings-per-share growth of over 27% annually, with returns coming from consistent dividend payments and capital appreciation. While the current correction feels significant, zooming out shows it’s more of a blip in an otherwise impressive growth story.
Valuation points to a discounted opportunity
At around $158 per share, goeasy trades at a price-to-earnings (P/E) ratio of approximately nine — well below its historical average. That represents a discount of roughly 25%, even as the business continues to grow and generate income.
Notably, the current dividend yield is 3.7%, which is substantially higher than its 10-year average of 2.2%. This elevated yield not only boosts income potential but also signals undervaluation. Analysts agree: the average 12-month price target is $235, implying nearly 49% upside from current levels.
A business built for the long haul
What really excites me about goeasy isn’t just the numbers — but the business model. The company focuses on serving Canada’s underserved non-prime borrowers, a segment often ignored by traditional financial institutions like the big banks. It now has over $4 billion in consumer loans on the books and has originated more than $16 billion to date.
goeasy operates more than 400 physical locations while maintaining a strong digital presence, creating an effective omnichannel platform. Strategic acquisitions like LendCare have further diversified its offerings into point-of-sale financing in industries such as automotive and healthcare.
Perhaps most impressively, about 60% of its customers see improvements in their credit scores, showing the company’s focus on financial empowerment — not just profit. This creates brand loyalty and long-term repeat business, helping cement goeasy’s position in the Canadian lending landscape.
Still growing – even with modest assumptions
Even if goeasy’s earnings growth slows to 15% annually (which is still good growth) over the next five years and its P/E multiple only modestly expands to 10.5, investors could still see annual returns of around 20%. That would be enough to double your money in under four years.
So yes, the stock is down. But from where I’m standing, this is exactly the kind of misunderstood growth story I want to be part of. And that’s why goeasy is firmly on my radar for a $5,000 investment.
If investors are worried about a recession looming but are confident in the business, they can split their investment and average into a full position over time.
