When high-quality stocks fall, smart investors pay attention. One such opportunity today is goeasy (TSX: GSY) – a profitable, fast-growing Canadian financial services company currently trading 22% below its 52-week high of $206.
At $160 per share at writing, goeasy appears undervalued. It trades at a 22% discount to its historical valuation and offers a nearly 3.7% dividend yield. With strong fundamentals and long-term growth prospects, this stock looks like a buy-and-hold-forever candidate.
Undervalued with significant upside potential
At current levels, goeasy trades at a much lower multiple than its historical average. Analysts have a consensus price target of $223, suggesting 39% upside from here. The dividend yield also adds income potential to total returns.
For long-term investors, this kind of value is rare in a company that consistently delivers double-digit growth.
Strong long-term growth track record
goeasy isn’t just about value – it’s a serious growth story. Over the past decade, revenue per share has grown at a compound annual growth rate (CAGR) of 16.8%, which translates to diluted earnings per share (EPS) growth of 27.6% annually. This kind of performance is exceptional in Canadian financials.
Interested investors can wait for goeasy’s first-quarter results on May 8, which would provide the latest updates and the business outlook, and could further confirm its strong trajectory.
Dividend growth machine
goeasy has paid dividends for two decades and raised them for 10 consecutive years with a 10-year dividend growth rate of 30%. Its dividend hike is still growing strong. In February, it boosted its payout by 24.9% to $1.46 per share per quarter or $5.84 per year, underlining its financial strength and shareholder-friendly approach.
This combination of income and growth is rare, making goeasy attractive for both income seekers and growth investors.
Niche market leadership
goeasy specializes in non-prime lending – a segment largely ignored by traditional banks. It has built a dominant position, and its loan book reflects that: from 2019 to 2024, it expanded at a 32% CAGR, reaching $4.6 billion. Management expects that number to hit $7 billion by 2027.
This underserved market offers ample room for growth, giving goeasy a long runway ahead.
Profitable and efficient
Operationally, goeasy is one of the best in its class. In Q4 2024, it reported an operating margin of 40.7% and a return on equity of 25.1% – both signs of strong profitability and efficient use of capital.
These metrics suggest that goeasy doesn’t just grow fast – it grows smart.
Resilient in tough times
goeasy has also shown an ability to thrive under pressure. During the pandemic and periods of rising rates, the company maintained stable credit performance, with net charge-off rates staying within its target range of 8.5%–10.5%.
Its proven risk management helps it weather downturns – and creates opportunities for investors when the market overreacts.
The Foolish investor takeaway: A rare opportunity
If goeasy can continue growing earnings at a double-digit pace, investors could see 15% to 20% annualized returns, potentially doubling their investment in four to five years. For long-term, patient investors, this dip could be a blessing in disguise.
In a volatile market, goeasy stands out as a high-quality, undervalued stock with growth, income, and durability – making it a truly magnificent Canadian stock to buy and hold forever.