$EZPW The Best Cheap Stocks to Buy for $10 or Les
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Posted On: 05/05/2017 2:14:50 PM
$EZPW The Best Cheap Stocks to Buy for $10 or Less: EZCorp (EZPW)
Stock Price: ~$9.40
Pawn shop operator EZCorp Inc (NASDAQ:EZPW) is a classic “dog with fleas” stock. EZPW stock fell from $38 in 2011 to under $3 early last year, as a disastrous entry in Mexico, lower gold scrapping revenue and other missteps collapsed earnings.
Shares quadrupled last year before pulling back, and the story still isn’t perfect. There’s a controlling shareholder, which limits the possibility of an activist campaign. The strong dollar has hurt reported revenue from the company’s operations in Mexico. Gold scrapping profits remain way down. Execution still leaves a bit to be desired.
But there have been a lot of improvements as well.
EZCorp sold off its Grupo Finmart business in Mexico. Earnings jumped to 15 cents per share in Q1 from 6 cents the year before. The stock trades at a single-digit multiple to free cash flow, and has rallied after bottoming at $8 earlier this month.
An eventual sale to larger peer FirstCash Inc (NYSE:FCFS) makes sense at some point — and likely will be at a price well above $10, as long as EZCorp can continue improving.
Stock Price: ~$9.40
Pawn shop operator EZCorp Inc (NASDAQ:EZPW) is a classic “dog with fleas” stock. EZPW stock fell from $38 in 2011 to under $3 early last year, as a disastrous entry in Mexico, lower gold scrapping revenue and other missteps collapsed earnings.
Shares quadrupled last year before pulling back, and the story still isn’t perfect. There’s a controlling shareholder, which limits the possibility of an activist campaign. The strong dollar has hurt reported revenue from the company’s operations in Mexico. Gold scrapping profits remain way down. Execution still leaves a bit to be desired.
But there have been a lot of improvements as well.
EZCorp sold off its Grupo Finmart business in Mexico. Earnings jumped to 15 cents per share in Q1 from 6 cents the year before. The stock trades at a single-digit multiple to free cash flow, and has rallied after bottoming at $8 earlier this month.
An eventual sale to larger peer FirstCash Inc (NYSE:FCFS) makes sense at some point — and likely will be at a price well above $10, as long as EZCorp can continue improving.
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