Propel Holdings (PRL.TO)

High quality, really well run. Contrary to what many investors think, very little in common with GSY. Selloff is buying opportunity. Private credit concerns do not apply here.

Be very cautious about the low- to mid-end Canadian consumer and their ability to pay. 

If you like the space, take a look at APO with its diversified asset base. You don't need to own sub-prime Canada to earn decent ROE.

Often lumped in with GSY, so it took a hit. Credit loss provisions popping up, and fears are warranted. However, likes it for the long term because so much exposure is US-based. Canadian exposure is quite small. Recent UK acquisition bolstering earnings. Proprietary AI credit score is leased out. Momentum weak. He’d wait for a breakout to a higher high, perhaps around $28.

The space has been under pressure. It's too small cap for her, but Raymond James does cover it and has a price target of ~$32 (70% implied upside). Valuation of 9/10. Be cautious of over-allocation, but not a bad time to add. Stock's been cut in half. Market's clearly worried about something that analysts aren't.

Digital alternative to payday lenders. Q4 was a little bit ugly, PCL spiked to nearly 57%. Growth story is still real. Revenue up over 20% last year, record expansion. Risk is sub-prime lending. High risk/reward.

Taken down unfairly. Whippy stock. Not widely held, somewhat illiquid. Delinquencies can go up in bad economies, and we have some headwinds. Bad news is more than reflected in the stock. Remember that even the stalwart names can have huge moves.

Likes it longer term. Trades at 6x PE with 30% growth. Plug your nose and keep it.

Peers have seen delinquency rates rising, but PRL's done good job managing that using AI. Continues to drive numbers higher, yet stock's challenged. Valuation got ahead of itself, but now it makes more sense. Earnings should continue to grow. He's watching it.

Q4 was pretty bad. Quality of loan book is the issue, with reserves going up and then being written off. Minefield. Wouldn't add more until you see loan-loss provisions stabilize. Canada might have some economic risk.

Digital alternative to payday lenders. Disruptive fintech, AI-enabled to assess credit. In US, UK, and Canada. Discounted valuation of ~6.5x PE, cheap on surface.

Here's the rub:  credit losses are very high (50% of the loan book, compared to banks' average of 0.7-1% or so). Analysts like the name, growing profitably. Very limited institutional participation. Low barriers to AI entry. He's wary, but you can keep it on your radar. Yield is ~4%. 

While the banks are trading at highs, Propel and Goeasy are substantially down over credit risk concerns, but their valuations are very attractive now. Be leery about it. 

One of the fastest-growing fintech names on the TSX. Online lending to consumers who can't easily get credit from the big banks. Impressive growth numbers. Works great in a good economy, but not so much when the economy turns (and that's what we're starting to see). Small, relatively less liquid stock.

Not set-it-and-forget-it by any means. Good growth story, if you're comfortable with the risk profile. Must watch credit quality every single quarter.

Market's focused on loan quality. Last quarter, EPS momentum slowed. Loan balances hit new highs, but full-year guidance reduced. Technically, has made a double top. Trump threatening to reduce credit card interest rates.

Current level of ~7x PE for 29% growth is buyable. High torque stock that will go up a lot when it works. Small cap, whippy. Don't buy in TFSA or registered account. 

His firm has a small position. Likes its growth trajectory and evolution of business model. Growth in earnings and revenue. Great signal that it again upped dividend, which high-growth companies typically don't do unless quite certain of the future. 

Reasonably inexpensive here. May have been hit by tax-loss selling. Very well run, well capitalized. Possible worries about credit cycle.

Exceptionally high ROE. Originations (new loans) slowed last August/September, but then they increased. (These are short-duration loans, and they always need to grow the loan book.) Business has been growing almost 40% a year. Expanding in UK, US, and looking at other countries. Presence in Canada is not too big.

Management are smart and capable individuals, and their own capital is at stake. Extremely well run, high quality. If you're OK with volatility, buy here and you should do well over time. Keep your portfolio position small.

Caveat: US government is imposing rules left and right. Doesn't think proposed interest rate cap of 10% will be applied to non-prime lenders, but it's unpredictable. If a cap were applied, would be devastating. This is still one of his best ideas in the space, given quality of management and the fact that UK business is growing fast.