If you can forgive the shameless plug way up here in the first line of this article, I must say that one of the best things about the Hidden Gems service is the access to crack stock analysis from the brains of other newsletter subscribers. It was an HG community member who first pointed me toward an interesting little company called First Cash Financial Services
The company is engaged in one of those businesses that many of us might find unseemly: pawn shops, payday loans, and paycheck cashing. Search for stories and banter about the firm, and you'll find little. Other investors tend to shy away from such outfits. And in their reluctance, you might find opportunity.
I look at it this way: First Cash takes care of neighborhoods and customers who aren't served by the likes of Citigroup
Today's nice-looking quarterly numbers provide a revealing portrait of a small cap that's solidly profitable and growing. Revenues climbed 21% to $41 million. This has been a habit recently, as this table shows.
| Earnings per share | 2004 | YOY growth | 2003 | YOY growth | 2002 |
|---|---|---|---|---|---|
| First quarter | $0.30 | 25% | $0.24 | 20% | $0.20 |
| Second quarter | $0.25 | 25% | $0.20 | 33% | $0.15 |
| Third quarter | NA | $0.25 | 39% | $0.18 | |
| Fourth quarter | NA | $0.29 | 26% | $0.23 | |
| Total | (Estimated) $1.22 | 24% | $0.98 | 29% | $0.76 |
The growth rate doesn't seem to be enough to attract the growth/momentum crowd, yet it's far ahead of competitors such as ACE Cash Express
The company has been producing abundant free cash flow for years and funds its expansion without taking on debt, which is why the balance sheet shows $20 million in cash and no long-term debt. With the share buyback announced today possibly taking 10% of the outstanding shares off the market, it looks like the best is yet to come.
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Fool contributor Seth Jayson has no position in any firm mentioned. View his Fool profile here.
