A blog about finance and life. And some other stuff too.
vendredi 26 avril 2019
The stock that went to 500$ with being still under the radar
In november 2017, I bought my first shares of Credit Acceptance Corp after seeing that Sequoia Fund had initiated a position with that stock.
To me, everything looked great with it: the ROE was high, the predictability was great, the PE and the Beta were low. It was everything I was looking for. The industry of loans to people who have bad credit is a little exposed to polemics, but it worked well for me in the past with Carfinco (CFN.TO, the ancient canadian stock bought by a spanish company).
Anyway, we live in an era where almost everyone has a bad credit. Even millionaires have a bad credit. How should we ignore that category of people which is becoming the majority of the population?
I bought my first shares for 287$ US each. Today, only a year and a half later, they're sold for 500$. They almost doubled. And they're still cheap.
Current numbers (according to Yahoo Finance):
Forward PE: 14
Predictability (according to Value Line): Around 90%
Annual growth last 5 years: 21%
Projected annual growth next 5 years: 20%
To me, it's a great stock. There's always someone to tell that some shit will happen with the company. But so far, they've been wrong and I don't see anything that would worry me. It's one of my few cheap stocks with great ratios.
It's easy to get a great performance with a stock that's under the spotlight like Spotify. There's so much excitation with it that any news is amplified by the medias and has a direct impact on the price of the shares. When a stock is under the radar (who talks about Credit Acceptance Corp?) and manage to get this performance, it's a great achievement.