TSX stocks have fallen quite a lot. Several top TSX stocks are trading at multiples significantly lower than their historical averages. However, this bear phase provides an opportunity for long-term investors. Moreover, any improvement in the macro environment from here will likely boost investors’ confidence and support the recovery in stocks.
Though interest rate hikes and inflation are short-term deterrents, now is the best time to buy shares of the top businesses in bulk. Against this setting, goeasy (TSX:TSX:GSY) is one stock I’d buy in bulk. Let’s consider the factors that show why goeasy has the potential to deliver multi-fold returns in the medium to long term.
A solid track record of boosting shareholders’ wealth goeasy is Canada’s leading non-prime consumer finance business. The company witnessed stellar demand for its offerings, which led to double-digit growth in its revenue and earnings for nearly two decades.
Thanks to its strong financial and operating performances, goeasy stock surged significantly in value and multiplied its shareholders’ wealth. Moreover, its solid earnings base has allowed it to enhance its shareholders’ value through regular dividend payments and hikes.
It has paid a dividend for 18 years. Moreover, goeasy increased its dividend at a CAGR of 34.5% in the last eight years.
Momentum to sustain Its solid financial performance reflects the resiliency of its non-prime lending model. Further, it shows that goeasy could perform well even in a weak economic environment.
Despite its solid fundamentals, its stock witnessed a sharp selling. Notably, goeasy stock has dropped over 43% this year. Further, it is trading more than 50% lower than its 52-week high. This significant correction is a solid opportunity for long-term buyers to accumulate shares of this high-growth company.
It is trading at a next 12-month price to earnings multiple of eight, which is at a three-year low and reflects a significant discount.
While goeasy is trading at a discount, the momentum in its business has sustained. In Q1 of 2022, goeasy continued to benefit from higher loan originations and stellar loan growth. As demand for its products improved, its gross consumer loans receivable portfolio jumped by 69% year over year. Further, its adjusted EPS increased by 16%.
goeasy expects solid growth in its gross consumer loans receivable portfolio and projects double-digit revenue growth in the coming years. Further, it plans to expand its margins by 100 basis points annually through 2024.
Its resilient business model, ongoing momentum in its business, and upbeat guidance point to a sharp recovery in its stock price.
Bottom line goeasy is transforming into a one-stop provider of all types of credit to subprime consumers and is expanding its product range. Last year, it launched an auto financing program and acquired LendCare, which added several new product categories. Further, it continues to expand its distribution channels and retail network, which bodes well for growth.
Overall, channel and product expansion, large non-prime lending market, higher loan volumes, increase in ticket size, and solid repayment volumes will likely boost its revenue, earnings, and dividend payments.
The post 1 Oversold TSX Stock I’d Buy in Bulk appeared first on The Motley Fool Canada.
Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.