How bad is it? Pawn shops, payday lenders are hot

Excerpt:

As the jobless rate inches up and the economic recovery sputters, investors
looking for a few good stocks may want to follow the money — or rather the
TV, the beloved Fender guitar, the baubles from grandma, the wedding ring.

Profits at pawn shop operator Ezcorp Inc. have jumped by an average 46
percent annually for five years. The stock has doubled from a year ago, to
about $38. And the Wall Street pros who analyze the company think it will go
higher yet.

....
Stock in payday lender Advance America Cash Advance Centers (AEA) has
doubled from a year ago, to just under $8. Rival Cash America International
Inc. (CSH) is up 64 percent, to $58. Such firms typically provide high
interest loans — due on payday — to people who can't borrow from traditional
lenders.

Profits at Encore Capital Group, a debt collector that targets people with
unpaid credit cards bills and other debts, rose nearly 50 percent last year.
Encore has faced class action suits in several states, including California,
over its collection practices. The Minnesota attorney general filed a suit
in March. No matter. The stock (ECPG) is up 59 percent from a year ago, to
more than $30.

Stock in Rent-A-Center (RCII), which leases televisions, couches, computers
and more, is up 57 percent from a year ago to nearly $32. Nine of the 11
analysts covering the company say it will rise further and that investors
should buy it.
...
Desperation stocks continue to be lifted by a drumbeat of bad news. Consumer
spending, adjusted for inflation, has fallen for two months in a row — the
first back-to-back fall since November 2009. On Friday, the government
reported the unemployment rate rose to 9.2 percent in June, sending stocks
in tailspin. On top of that, one in seven Americans now live below the
poverty line, a 17-year high.
...

"Here we are celebrating the second year of recovery and confidence is at
levels consistent with a recession," says David Rosenberg, an economist at
money manager Gluskin Sheff. "The folks in the survey are probably not the
same folks shopping at Tiffany's." (That company's stock is also up nearly
50 percent since March, to about $82.)

But they probably are shopping at Dollar General Corp. Stock in the discount
retailer recently hit $34.13, up 50 percent from its IPO in late 2009. And
it may be worth about a third more, at least according Avondale's Montagna.

"People are broke. They're all chasing value. It's a seismic shift in
mindset," he says.

...

In investing, it’s often better to focus on what you can safely predict,
even if that safety is found in companies that thrive on hard times. One
good bet: The jobless aren’t likely to find work anytime soon. And companies
profiting from their bad fortune will continue to do so.


Read more here:
http://www.suntimes.com/business/6445605-420/how-bad-is-it-pawn-shops-payday-lenders-are-hot.html


This is an AP article.

J

-

The fact that we are here today to debate raising America’s debt limit is a
sign of leadership failure. Leadership means that ‘the buck stops here.’
Instead, Washington is shifting the burden of bad choices today onto the
backs of our children and grandchildren. America has a debt problem and a
failure of leadership. Americans deserve better. I therefore intend to
oppose the effort to increase America’s debt limit. - Barack Obama


"I will not rest until businesses are investing again and businesses are
hiring again and people have work again," - Barra

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