ezpwjunky has mentioned several times on this board that EZPW's stock moves on data points. This is not a go-go momentum stock. It gaps up when the numbers delivered by the firm dictate the stock deserves to go higher.
I am not a TA guy or a chart expert. However, just by looking at the chart, even an amateur like me, can see that ezpwjunky is right. I could go back to a year or two year chart, but take a look at a 6 month chart of EZPW.
The stock was heading lower on light volume at the end of June when EZPW raised guidance. The stock immediately gapped up $8.00. The stock remained in a trading range for awhile, and then began drifting lower, on light volume, until October 13 when the firm raised guidance again. The stock gapped up $10 in three days.
The stock has drifted lower in light volume the past few days on light volume. I am not saying the firm will raise guidance this week (although, I think that is a good posibility). However, the next data point will cmoe within two weeks, and the stock will gap up. I suspect around $2.00 to $3.00.
Am I being too optimistic?
I forgot to add the one year chart. Is this pretty obvious or what? I know past performance does not guarantee future results...
This sector's growth story is still intact as stores added over the last few years mature and new locations are added. However, given the regulatory and eventual competitive pressure on rates (no moat), much of the growth is priced in. Outperforming expectations (estimates or whisper numbers) can lead to superior stock returns. However, when a stock has been on the IBD100 list for several months the likelihood of expectations being beaten is reduced. Too many eyeballs reduce the likelihood of a stock being inefficiently priced (undervalued relative to growth potential).
Garp. I think you are correct in being more cautious in your optimism with EZ. 50% growth will be hard to get if Gold collapses (although I don't have a firm grasp on how high we go with PDL maturation).
I also agree that SOME of its valuation is already baked in with the recognition they recieved in the last year and it is not nearly the bargain it was last yaer. However I love the idea of lots of eyeballs looking at this guy as long as we keep putting up good numbers. Walmart, Starbucks, Google all have/had all eyes on them for years and still had monster increases. It is much better to have too many eyes than too few (after you take your position that is).
If the earnings beat were already baked in then why do we get 15%+ pops on pre-announcements? Even with the immediate pullback after we hit $50 in after hours when last quarters actual numbers came out, we are still currently higher. The $50 guys were correct it just took awhile to get back there.
In the end IBD 100 doesn't determine the price of this stock, the big boys do and they are currently buying.
P/E of 23 with 100% yoy growth and all those extra eyeballs looking for 30%+ does not mean we are fairly evaluated. Especially with Texas not sniffing at our profits so far.
I think we are saying the same thing and the bottom line is:
Don't expect 100% or 200% returns this year. Although a 50% return is not out of the question.
I could see EZPW trading at $21 in the frst half of 2007, and $24 in the second half... agreed?
I agree with your assessment that the growth story is still intact (Divi says it is the 5th inning of a 9 inning game) although there will be continued saturation for a few more years, and then consolidation. We still have a few more years of growth.
Different companies are exposed to the "regualatory" effect as they have established themselves in different states in our country. EZPW has 70% of their stores in Texas, and I think that they are pretty safe in that state. Virginia has already stated that they will not regulate, and I think that isssue is way overblown.
The fact is there is a great demend for this product, and that will continue to grow in the future.
I don't agree with your assessment that all the growth is priced into the stocks. If that were the case, these stocks (CSH, FCFS, and EZPW) would be trading at much higher multiples. The legislative issues will become more clear in 2007. The fed will cut interest rates in 2007 which will help stocks. Those two macro factors will help these stocks. Although they will be helping themselves by delivering great earnings again this year.
There are many investors looking for growth stocks. We know the economy is slowing in 2007, and there is going to be many companies who will lower their guidance. This is a good niche market to be.
The fact that EZPW has been on the IBD 100 list is a testament to their earnings growth, and not hype! When the growth slows they will be lowered/removed from the list. Does that mean that EZPW is not a growth stock any longer?