Investing in Goeasy Financial

I'm up 82% since I purchased GSY.TO over a year ago. I bought just a couple hundred shares @ $20.75. It closed Thursday @ $37.98.

Not trying to impress anyone with my investing prowess or my stock picking skills, I just like alternative stocks and this is one of those.

By alternative you could also say a niche stock or a disruptor if you will. Goeasy makes its money giving out high interest loans to people who want to lease furniture, electronics, appliances and computers.

The company operates in 2 different divisions 'easyhome' and 'easyfinancial'.

easyhome

You don't want to buy anything because you just took a job in the tar sands of Alberta. Maybe it's just for a year or so, so just lease some creature comfort shit to get you by until you want to pack up and go home. These guys have everything covered for you and if you want to buy then just join the lease to own program.

I'm an investor in the company not because I use their services, NO, because I believe there is demand for this type of stuff for people. So far so good, they have been around for 11 years. Here's want they have that you may want to lease to own;

• Furniture - lamps, TV stands, bedrooms, living rooms, tables and dining stuff
• Appliances - washers, dryers, fridges, dishwashers, freezers, stoves, vacuums
• Electronics - TV, cell phones, gaming etc. etc..
• Computers - laptop, desktops and tablets

You can get all kinds of brand names under flexible lease agreements.

easyfinancial

They will provide you with a personal loan up to 25K. Let's say you just need 5K in a pinch. How would it work?

You're going to end up paying $67.55 a week for 36 months. That's a pretty big nut to crack so make sure you have a good job and cash flow. Matter of fact that's mainly what you need here to be taken on as a client.

They are a hell of a lot cheaper than those pay day loan guys so check them out if the car breaks down or the bank rejects you. This is another reason I like them as an alternative lender.

Is It a Good Investment?

Let's check out some analyst comments and look at some numbers.

They have just moved into Quebec to help grow their business. When you are in the loan business you are going to have some bad ones and they are doing a great job bringing them down.

• The stock only trades at 10X earnings with a dividend yield of 2.4%

• ROE of 17% and a low payout ratio of 30%

• Low debt with 405M in revenue yearly

• Only 13.4M shares issued
• currently trading at 14X forward earnings

Bay Street has a target price of $44. That's almost a 15% upside from here in the next year. Raymond James lists it as Outperform but that's not why I buy stocks or hold them. I just got lucky with GSY when I bought it. I am going to hang on to it for awhile yet.

They just keep spitting out cash currently @0.38 cents a share, and good news keeps coming.

I really love the business model because they fill a niche where traditional banks or other lenders can't fill.

These smallish type loans and a lease to own furniture business, I believe will always be needed. I remember HFC and AVCO finance when I was a bit younger. Do you remember those names or buildings?

My brother was once a loans officer for HFC on the Danforth.

I believe goeasy has filled that void since all the early adopters went belly up. 


goeasy also provides an online service.

My Final Takeaway

As an investment I think it's a buy as diversification away from the big Canadian Banks of which I also own lots of.

What I have also found is that it does great in a rising interest rate environment because they can charge more and it also moves opposite to the other financials. When the banks were all up sharply on the last trading day of the first quarter, GSY traded down.

I love this kind of trading action as it provides much needed balance to a diversified dividend growth portfolio.

Sidenote : Down 3.9% in today's trading. On sale NOW!

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