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Banks ran up a lot lately, so I was looking to buy something for more potential of rallying, within financials.
I do like HomeCapital and Genworth valuations and late come-back, after the shorts were proven wrong once again, but I prefer even more 'stealthy' stocks,
those that get little attention on BNN.

GoEasy
- 2.6% dividend
- PE = 10
- Last quarter was great
- 15% away from its 52-week high

I'm buying a half position at 19.15.
 

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I've held the stock for almost 3 years. The company has been doing great, but the stock has been stalled for 2 years. The more the company earns, the more the market discounts the valuation so the price never moves up much.

I think it's stuck in this same negativity surrounding financials in Canada with the oil bust, but it seems the big banks are finally breaking out of it. It hard to imagine if the market keeps rallying that eventually it won't filter down to GoEasy. The stock should be a lot higher. My target is mid-20s.
 

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Nobody talking about this stock?

Multiples are some of the cheapest on the TSX, other fundamentals are good (operating margin, return on equity, etc.).

Earnings are growing fast. The stock itself is growing very fast. It's even paying some growing dividends for those who like dividends.

I feel pretty confident about the growth of this one. But I don't like when I'm confident, so I want to be challenged by other opinions.

I know that many people don't like their business model.

Any opinion?
 

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Nobody talking about this stock?

Multiples are some of the cheapest on the TSX, other fundamentals are good (operating margin, return on equity, etc.).

Earnings are growing fast. The stock itself is growing very fast. It's even paying some growing dividends for those who like dividends.

I feel pretty confident about the growth of this one. But I don't like when I'm confident, so I want to be challenged by other opinions.

I know that many people don't like their business model.

Any opinion?
I like it. Revenue growth in the 18 - 20 % range. EPS growth around 26%. ROE 20 %.
Ticks a lot of the right boxes.
Niche market. Not aware of any serious competition. Previous company in this market was Household Finance but they disappeared - Apparently they were bought out then the market was abandoned but not sure about that.
 

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I've owned GSY several times - recently this year made a nice 100%+ gain on it. It sells off at the first sign of financial stress and of course has an extremely resilient business model. Would buy again on any big pullback, but I typically wait for 40-50% corrections. It has so much free cash flow that once the selling stops, the buybacks take over.
 

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I've owned GSY several times - recently this year made a nice 100%+ gain on it. It sells off at the first sign of financial stress and of course has an extremely resilient business model. Would buy again on any big pullback, but I typically wait for 40-50% corrections. It has so much free cash flow that once the selling stops, the buybacks take over.
Definitely a volatile sucker. In the 2018 rate hike scare, the drawdown was 44% versus just 16% for the market (nearly 3X the drop)

In the 2020 crash, drawdown was 74% versus 38% for the market (about 2X the drop)

It's performing much more strongly than the broad market. So it's high beta, but has a good risk-adjusted return nevertheless. Market cap is only $1 billion so it's a small cap, expected to be very volatile.

If picking small cap stocks is your thing, could be a good one!
 

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Would buy again on any big pullback, but I typically wait for 40-50% corrections.
If picking small cap stocks is your thing, could be a good one!
I already own it and I was thinking that I should've made it a bigger holding. I like it a lot.

But since it's very volatile and as @doctrine said and as I was also thinking, it's better to wait for a pull back.

First time I bought it, it was on April 15 (the date I started buying stocks for the first time of the year 2020) but I was being cautious so I took only a very small position which gained +159% so far. Then in June I decided to take a bigger position and that bigger position is now at +75% so my overall is +86%, but I don't plan buying more at this point since we're at all-time high.
 

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I love the business model, however I have several concerns, particularly with their lease to own service.

1. They prey on poor credit individuals. What happens when they can't pay
- This is hedged by the fact that their prices are so insane, they break even almost immediately.
2. Their pricing is predatory and IMO would violate usury laws, one good consumer protection complaint could destroy this business.
Playstation 4 Pro
@$25/wk for 104 weeks = $2700 over 2 years
Retail
$499.99. << at retail!!!

The rip off level is IMO so bad that
1. To even suggest pricing this bad makes me question their ethics.
2. They're are at huge risk of consumer default
3. They're at huge risk of government action.

I don't do business with unethical people, if they'll screw other people they'll screw you.
 

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Seems odd that you said you love their business model and immediately listed all the reasons why most people say they don't like their business model. :p

I'd question the ethics, true. If the government takes action to decrease the legal maximum interest on a loan, they would be hit bad, true. Or maybe they are already at the limit of legal and that could be a risk, true. About defaults, I think their business model is already running smoothly with that risk.
 

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I think there's a sure thing though. As their business grows, it'll draw more attention and their business will be perceived negatively which will hurt them. They won't be allowed to continue growing at 40% CAGR and outpace banks. (I believe it would take at least two decades though, even at 40% CAGR)
 

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Seems odd that you said you love their business model and immediately listed all the reasons why most people say they don't like their business model. :p

I'd question the ethics, true. If the government takes action to decrease the legal maximum interest on a loan, they would be hit bad, true. Or maybe they are already at the limit of legal and that could be a risk, true. About defaults, I think their business model is already running smoothly with that risk.
I love the business model, but I think that their rates criminal.
They get the full retain price in less than 6 months, then continue for 18 more months.

I think waterheater companies have the same business model, but the rates aren't quite as bad, and they don't prey on the vulnerable.


I think loans, product financing, futures contracts etc are all perfectly legitimate and reasonable business transactions.
I actually think commodity trading and futures markets are WONDERFUL.

That being said, I have little tolerance that will use these tools to exploit people.
 

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I love the business model, but I think that their rates criminal.
They get the full retain price in less than 6 months, then continue for 18 more months.

I think waterheater companies have the same business model, but the rates aren't quite as bad, and they don't prey on the vulnerable.


I think loans, product financing, futures contracts etc are all perfectly legitimate and reasonable business transactions.
I actually think commodity trading and futures markets are WONDERFUL.

That being said, I have little tolerance that will use these tools to exploit people.
I wonder if you have a credit card, and what is the interest rate on such unsecured credit?
High rates are usually related to the degree of risk to the lender.
 

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I wonder if you have a credit card, and what is the interest rate on such unsecured credit?
High rates are usually related to the degree of risk to the lender.
I used Loan Calculator

$25/wk for 2 years, on a $500 loan is an interest rate of 280%.

Credit cards max out at 30%
Criminal Usury s 60% in Canada

However payday loans are exempt (and limited to 390% in Ontario)

Legal or not, I consider an interest rate of 280% unethical.

Honestly wait 4 1/2 months and save for your PS4, or furniture.
 

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I used Loan Calculator

$25/wk for 2 years, on a $500 loan is an interest rate of 280%.

Credit cards max out at 30%
Criminal Usury s 60% in Canada

However payday loans are exempt (and limited to 390% in Ontario)

Legal or not, I consider an interest rate of 280% unethical.

Honestly wait 4 1/2 months and save for your PS4, or furniture.
Save for your PS4: I agree. You talk as if customers are forced not to save for it.
 

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Save for your PS4: I agree. You talk as if customers are forced not to save for it.
No, I simply think it's unethical to charge criminal interest rates.
There are more than enough ethical companies out there, I simply choose to deal with them.

I also think poor ethics is a business risk, why would I choose to invest in a riskier business.

I understand that many people see a significant detachment between the stock market and the underlying investment (eg company). That is not my investing philosophy.
 

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No, I simply think it's unethical to charge criminal interest rates.
There are more than enough ethical companies out there, I simply choose to deal with them.

I also think poor ethics is a business risk, why would I choose to invest in a riskier business.

I understand that many people see a significant detachment between the stock market and the underlying investment (eg company). That is not my investing philosophy.
"Criminal " is your subjective opinion. And since you are not the lender who has a responsibility to calculate risk with clients with no credit rating and bad credit, I think you word "criminal" is blather.
 

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"Criminal " is your subjective opinion. And since you are not the lender who has a responsibility to calculate risk with clients with no credit rating and bad credit, I think you word "criminal" is blather.
No, when I say Criminal, I specifically mean criminal in accordance with the Criminal code of Canada.
Criminal Code 347
"criminal rate means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement; (taux criminel) "

Now there is an exception that makes it legal, but yes I hold that charging an interest rate of 280% is a criminal rate, as defined by the Criminal Code of Canada.
 

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No, when I say Criminal, I specifically mean criminal in accordance with the Criminal code of Canada.
Criminal Code 347
"criminal rate means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement; (taux criminel) "

Now there is an exception that makes it legal, but yes I hold that charging an interest rate of 280% is a criminal rate, as defined by the Criminal Code of Canada.
Well the authorities don't seem to agree with you. This topic has all been discussed in another forum, and no it is not criminal. If you insist it is criminal, call the police and prove it.

Is it ethical for banks to decline to loan money to these folks? You claim that you would only deal with ethical banks, but you don't seem to grasp that the clients we speak of were rejected by the banks. Is it ethical for the banks to turn them away?
 

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GSY escapes the regulation oversight for the most part because they are not as far down the chain as the payday loan stores, which also operate legally. Their rates can certainly be high, but this company has a very significant and very visible presence in every province in Canada including Quebec now, they are not hiding in the shadows. You don't have to like it, but I would agree that they do offer credit to people who couldn't get it, and they also do still have to turn down a lot of people who apply.

Let's also point out they write off 10-15% of all their loans. The big banks have loan losses that are a fraction of 1%. So no, other than giving people money outright, there are no other options other than the Payday Loan companies which will charge a lot more. GSY has found a way to make reasonable operating margins (less than the big banks, I might also add) in the middle ground of credit profiles and provide loans to tens of thousands who would otherwise not be able to find it.
 

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Well the authorities don't seem to agree with you. This topic has all been discussed in another forum, and no it is not criminal. If you insist it is criminal, call the police and prove it.

Is it ethical for banks to decline to loan money to these folks? You claim that you would only deal with ethical banks, but you don't seem to grasp that the clients we speak of were rejected by the banks. Is it ethical for the banks to turn them away?
The interest rate is by definition a criminal interest rate under the laws of Canada.
The actual arrangement is apparently legal.
I'm sure all sorts of things are discussed on other forums.

Yes, I do believe it is ethical for banks or any other lender to refuse lending services to those unlikely to pay back the loan.
I have not heard any reports that they were refused banking services.
 
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