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Auto financer Carfinco gets high marks using Peter Lynch stock strategy Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

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Edmonton-based small-cap Carfinco Financial Group Inc. provides vehicle financing to consumers who are not able to obtain it from more traditional lending sources. It focuses on those with "C" and "D" level credit due to impaired or limited credit histories, and purchases loans made by independent and franchised vehicle dealers in all ten provinces. It has a market cap of $274-million.

Carfinco has grown EPS at a 38-per-cent pace over the long term (using an average of the 3- and 5-year rates) and revenues at a 26-per-cent pace (average of the 3-, 4-, and 5-year rates).

It gets strong interest from the Peter Lynch-based model, which likes its strong growth and reasonable 12.9 P/E ratio, which make for a stellar 0.34 PE-to-growth ratio.

Carfinco offers 4.3-per-cent dividend yield and has an exceptional 47-per-cent return on equity.

It has averaged a 13.7-per-cent return-on-assets rate over the past decade, which the Warren Buffett-based model likes.

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