Sharp market declines can sometimes disconnect a company’s stock price from its underlying business performance. For long-term investors, those periods of weakness may create attractive opportunities, especially when a company continues generating strong revenue growth and cash flow despite market volatility. That’s why I always keep looking for dividend-paying stocks trading well below their previous highs.
One such Canadian stock that I find attractive right now is Propel Holdings (TSX: PRL). Despite a steep decline in its share price over the last year, the fintech company continues to deliver record revenue growth and expand its business aggressively. In this article, I’ll explain why this undervalued Canadian dividend stock could be worth buying and holding for the long term.
Source: Getty Images
Propel Holdings stock
Headquartered in Toronto, Propel Holdings mainly focuses on providing credit solutions to underserved consumers. Through brands such as CreditFresh, MoneyKey, Fora Credit, and QuidMarket, the company offers installment loans and lines of credit using an artificial intelligence (AI)-powered underwriting platform.
PRL stock currently trades at $21.40 per share with a market cap of $842 million. While the stock has fallen by 36% over the last year, recent momentum has started improving as shares have gained nearly 15% quarter to date. At the current market price, it also offers a dividend yield of 4.4%, with quarterly payouts.
Record revenue growth highlights business strength
Propel’s latest financial results suggest its business remains in strong shape despite the stock’s decline. In the first quarter, the company’s revenue rose 20% year-over-year (YoY) to a record US$166.1 million. That growth was largely driven by stronger consumer demand for its services and rising loan originations. Its total funded originations also climbed 30% YoY to a record US$199.3 million as the company continued expanding its geographic footprint and customer base.
One of Propel’s biggest competitive advantages is its AI-powered underwriting system. Instead of relying heavily on traditional credit scores, the company uses broader data analysis to assess borrower risk and improve lending decisions. This approach has helped support relatively stable credit performance even as the company scales rapidly.
At the same time, Propel’s profitability also remains impressive. In the latest quarter, it generated adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of US$42 million, marking another company record. While its net profit dipped slightly due to increased spending on growth initiatives, the company’s adjusted net profit held steady at US$23 million.
Expansion initiatives and fresh capital could drive future upside
Beyond current results, Propel Holdings continues investing heavily in future expansion opportunities. It recently launched Freshline in partnership with Column, allowing it to target additional customer segments and expand into new geographies.
The company has also strengthened its financial flexibility by securing US$210 million in fresh capital commitments, including funding from Mesirow Alternative Credit and a new institutional investor. This additional capital could fuel its future originations growth and product expansion.
Why this Canadian dividend stock could be worth buying now
While small fintech stocks can sometimes face short-term volatility, Propel’s strong revenue growth, expanding product lineup, and improving operational scale suggest the business may still have big long-term upside potential.
For investors seeking a discounted Canadian growth stock that also offers an attractive dividend income, Propel stock could be worth a closer look right now.
