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5-Star Stocks Poised to Pop: Portfolio Recovery Associates

By Brian D. Pacampara | More Articles
February 18, 2009 | Comments (2)

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, bad-debt collector Portfolio Recovery Associates (Nasdaq: PRAA  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Portfolio Recovery's business, and see what CAPS investors are saying about the stock right now.

Portfolio Recovery facts

Headquarters (founded)

Norfolk, Virginia (1996)

Market Cap

$354.5 million

Industry

Specialized finance

TTM Revenue

$263.3 million

Management

Co-Founder/CEO Steven Fredrickson

Co-Founder/CFO Kevin Stevenson

Return on Equity (average, last three years)

19.2%

Competitors

Asset Acceptance Capital (Nasdaq: AACC  )

Asta Funding (Nasdaq: ASFI  )

CAPS members bullish on PRAA also bullish on:

Apple (Nasdaq: AAPL  )

Nuance Communications (Nasdaq: NUAN  )

CAPS members bearish on PRAA also bearish on:

General Motors (NYSE: GM  )

Citigroup (NYSE: C  )

Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 3,390 of the 3,489 members who have rated Portfolio Recovery -- or 97% -- believe the stock will outperform the S&P 500 going forward. These bulls include nonzerosum and JMJeffrey.

Just yesterday, nonzerosum summed up the company's most recent quarter in bullish terms:

Solid results for a tough quarter and margin/productivity pressure. [Fair value] north of $50. A lot of bad news and worry is priced into the stock, and i think collections per hour will pick up after the recession. I was worried collections would fall off a cliff in Q4 2008 so i didn't invest till now.

In a pitch from late last month, JMJeffrey shares that contrarian spirit:

[Portfolio Recovery] is a great company and leader in its field of debt collection. Very solid leadership. It is very disciplined in the debt it 'buys' and continues to evolve in its ability to get a better return on its investment. Heavy buying the previous year has somewhat left this stock flat for a while but it is now poised to realize the benefits of it discipline and continuous improvement. Not a short burner but a long range grower and market beater.

What do you think about Portfolio Recovery, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Portfolio Recovery and Nuance are Motley Fool Hidden Gems picks, while Apple is a Stock Advisor choice. The Fool's disclosure policy always gets a perfect score.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 19, 2009, at 5:35 PM, LMAB wrote:

    I don't think PRAA is a great investment.Let's face it;we loosing jobs,can't pay mortgage and last think you will pay is deliquent credit card to PRAA ,that bought your acct.for pennies on the dollar.If your acct.gets to PRAA most likely is past SOL.therfore they can't collect,if they suing some corp.for unpaid bills they are propobly out of bussines and somebody said they might go into collecting unpaid taxes?(who is better then IRS?).

    I think their books are just as good as FNM,Enron etc. Somebody from SEC should take a closer look.

    If you can't pay your creditor,then you defenitly not going to pay PRAA.they will sue,garnish your bank acct.but that's all.FICA is ruined.

    There is no way collections this days are profitable.When people have money,they pay their bills not PRAA.You can't squize an egg out of rooster.

  • Report this Comment On March 05, 2009, at 2:52 PM, IRSCrimesWatch wrote:

    Investors should do well to keep their money away from this outfit!

    PRAA just sent out huge amount of fraudulently prepared 1099-C's. 1099-c's are used notify IRS of legitimate debts that were forgiven. This causes the "forgiven" to owe more in taxes due to this windfall, and gives the "forgivee" a big tax deduction. The loan being forgiven must be legitimate, not out of statute of limitaions, and actually owned by the forgivee - logical, right? Unfortunatly for PRAA, they don't own the orginal debt or the full amt of the debt that they bought on the junk market, most of their stuff is way beyond the 7 years IRS allows, and they can only legitimatley deduct what they paid for the debt, IF it is verified. Guess who fails the test all the way around. Run, do not walk, away from this company before the whole scheme comes tumbling down!

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Related Tickers

5/25/2012 4:00 PM
PRAA $69.24 Up +0.04 +0.06%
Portfolio Recovery… CAPS Rating: *****
C $26.47 Down -0.19 -0.71%
Citigroup Inc CAPS Rating: ***
GM $22.44 Up +0.40 +1.81%
General Motors Com… CAPS Rating: **
NUAN $20.71 Down -0.12 -0.58%
Nuance Communicati… CAPS Rating: ****
AACC $5.43 Down -0.25 -4.40%
Asset Acceptance C… CAPS Rating: ***
AAPL $562.29 Down -3.03 -0.54%
Apple CAPS Rating: ***
ASFI $8.96 Up +0.08 +0.90%
Asta Funding, Inc. CAPS Rating: **

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