Propel Holdings (PRL.TO)

Overall, it wasn't the best quarter from PRL but they are being conservative and thinking longer-term which is what you probably want to see in this type of business.  The conference call highlighted an uptick in delinquencies in the US which caused PRL to get a bit more conservative on their underwriting. This appears to be due to factors such as student loan repayments restarting, government shutdown and potentially just a bit higher inflation eating into consumer income. Management sounds like they are simply being more proactive, which is a good thing, and once when they have a better handle on the economic backdrop, they will look to increase volumes again.
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The big question is why is it selling off so much. There is concern about a weakening economy and the short article is an overhang. It is reporting soon and needs to prove the shorts are wrong by showing continuing growth. He liked their last report and models 30% EPS growth and 12X earnings. You could add here remembering it is a small cap. Money is starting to flow out of large caps into small caps.

Not in either of his funds, but is in some client accounts. Strong operator. Bigger player in the US market than in Canada, and stock's really come off in last 6 weeks due to target market being under stress. Tightening up on successful loan applications -- may see short-term slowdown, but it's the right thing to do. 

Long-term growth algorithm still intact.

Stock's about 40% off its highs, but sounds as though the business fundamentals haven't really changed. Might be contagion from difficulties of US sub-prime lenders. He understands that PRL's actually been tightening up who it gives credit to. If so, could have a really strong quarter.

Believes it reports first week of November. Then we'll have a much better perspective on revenue, earnings, and credit.

Scores 7 for fundamentals. The street targets 44% upside. Revenues are up 42% and net income 67%. Continue to hold and ride it out. Has a strong tech platform that's expanding to the UK. Non-prime lending is a little risky. 

Last quarter had record originations. Earnings momentum continues, up 22%. Very good loan balances. Goldilocks opportunity -- marketplace uncertainty rises, but economy weakens only marginally. Lots of people don't have access to traditional credit, and AI has really helped identify qualified candidates. 90% in the US, with growth in UK.

Reasonable multiple at 12x for 2027, growing ~31%. Doesn't get the respect it deserves. A must-own.

Undervalued. Fundamentally solid, likes it a lot. People don't like the sub-prime lending industry, so it will never get a huge multiple. Seen as a loan shark business. 

But it is a legitimate, legal business and it's doing very well. Raised dividend ~8x in past 3 years. Growing in range of 40%, and that should continue. Market share is expanding. Good control on credit. Interest rates will help.

Are growing at strong rates, compounding earnings at 40% annualized for many years to come. Top managers who have developed a global business in the US and UK. Is an organic growth and by acquisition story. Their lending as a service business taken no credit risk, but is very profitable.

Only thing is that this could be a double top, meaning it failed at its old high. It's not a double top until that last low (neckline) around $25 is broken. Right now, it's a 5/10. If it bounces off support, it's fine. If not, beware.

Two stories here. Long term, the Canadian financial sector has been so consolidated for so long that it's left some openings in terms of digital offerings. We're quite behind the US in this. 

Short-medium term, how is the Canadian credit situation? Haven't seen the credit story deteriorate yet. But need to keep an eye as mortgage renewals come through and tariffs dampen NA consumers' spending. A better entry point will likely show up.

His firm is very conservative, prefers to have exposure through larger, better-capitalized dividend payers. But companies like this one do take market share, so it's something he'd probably look at in future as it becomes more established.

Likes the longer-term chart. His team's fundamental analyst likes it as well. We're right near that first support level of $30, with major support around $20 (back up the truck). If it goes below that, then be concerned.

If you're worried, reduce a bit. Let the market go through its corrective phase, and then look to add back. Another 2 years left in the cyclical bull market we're in; if so, this one should continue to run. Benefits from economy doing well.

Management's done fantastic job on execution. Really accelerated growth. Uses AI both to generate leads and to analyze them for loans, which helps reduce bad loans. Growing organically, plus made UK acquisition. US is their big market. High insider ownership. Starting to see market breadth broadening for small caps in Canada.

It is an online lending platform. It is not in his data base. The host pointed out that it is up 60% in the past year, pays a 2% dividend, has a $1.5 million market cap and uses AI.

Is approaching its last high of February around $42. Would like to see it break above that, because a stock can always break down. It's actually better to buy higher.

Definitely. On the chart you can see the cup and the handle. Good pattern for buying, and that's happening. Stock's going higher. Great-looking pattern. He can see upside to the mid-$40s.