5 Stocks That Just Won't Quit

In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.

Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:

Companies are selected from the "New 5-Year Highs" list published on MSN Money on Friday. CAPS ratings from Motley Fool CAPS.

Hot stocks leave investors cold
Is the recession over? Warren Buffett says it is, and with the Dow still sitting comfortably above the 10,000 mark, you'd think investors would agree. Judging from the miserly star-ratings being handed out in the table up above, however, it seems a lot of folks still have their doubts.

I mean, each of these stocks is hitting its five-year-high, right? That's bullish news ... right? Then why, I ask you, is the top-rated stock on today's list a company that sounds like it came straight out of the opening credits of a Roadrunner and Wile E. Coyote cartoon?

The bull case for EZCORP
For those not familiar with the company, a short introduction is in order: "EZCORP provides loans or credit services to customers who do not have cash resources or access to credit to meet their short-term cash needs." It's a pawn shop owner. A payday lender. A pink slip car title holder -- and a company that last month announced 73% earnings growth and upped its guidance for the fiscal year.

CAPS member tombo615 calls EZCORP "a promising company for several reasons. Their financial statements show signs of consistent, long-term growth and profitability. Over the past five years they have substantially grown, increased their retained earnings, and paid off debt."

How does EZCORP make it all look so easy? CAPS member ticerman gives us part of the answer: "money is getting harded to get with more scrutiny from lenders." And as fellow Fool Sean Ryan recently argued: "Credit card lenders such as Citigroup (NYSE:C), Bank of America (NYSE:BAC), and JP Morgan Chase (NYSE:JPM) have been slashing credit lines even for good customers, meaning consumers have less access to credit card loans," which forces said consumers to turn "to non-banks, such as pawn lenders" for their short-term cash tide-me-over needs.

Behind the headlines
This, however, is only part of the secret to EZCORP's success. After all, according to the Wall Street Journal, loan standard tightening is slowing down, which you would expect to adversely affect EZCORP's business. Fortunately for the pawnbroker, though, clickme999 tells us that in addition to boasting: "high margins, strong growth," EZCORP is also: "Diversfying into Latin American markets" (and I should add, into Canada, Australian, and the U.K. as well.)

What it all adds up to is a company with strong growth prospects in the future, and an attractive valuation today. EZCORP sells for roughly 12 times both GAAP earnings and free cash flow based on trailing results. And going forward, Wall Street expects the firm to post 15% annual growth over the next five years -- which, to me, looks like a bargain any way you look at it.

Foolish final thought
Now no discussion of a pawnbroker can be complete without addressing the morality of the industry. A lot of folks will tell you that pawnbrokers and payday lenders are just plain bad people, preying on the misfortune of the poor. This thinking keeps the industry under a constant cloud of threatened legislative action to ban its loans, or restrict the rates it needs to charge to stay in business. I don't necessarily disagree ... but I do want to ask these critics: What's the alternative?

If a person badly needs a loan, and JP Morgan won't give it to 'im, what's he supposed to do? Visit a loan shark? Buy a lottery ticket and hope for the best?

Maybe pawnshops are a bad option, but sometimes, a bad option is all you've got. If Congress puts companies like EZCORP out of business, all this will accomplish is to push cash-strapped borrowers into the arms of even worse "lenders."

To my way of thinking, therefore, if you don't like poverty, and don't want to see companies like EZCORP profiting from it -- I'm with you 100%. But the solution isn't to hate EZCORP. The solution, I submit, is to give more to charity, and make companies like EZCORP unnecessary.

Time to chime in
OK. I'll climb down off my soapbox now, and you can climb up. If you've got an opinion on EZCORP -- or on payday lenders, charitable giving, or the intractability of poverty in American society, here's your chance to say your piece. Click over to Motley Fool CAPS now, and rant away or drop a note in the comments box, below.