The financial services industry is quite diverse. Elite firms like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) make enormous profits, while smaller oufits like Charles Schwab (NASDAQ:SCHW) cater to the average citizen. Even the worse-off among us are served by pawnshops and payday lenders. The latter segment may not be a glamorous slice of the market, but it's lucrative nonetheless. Witness First Cash Financial (NASDAQ:FCFS), my pick for Best Financial Stock for 2007.

It's all about the Hamiltons
Founded in 1988, First Cash owns and operates roughly 400 retail locations in 13 states and Mexico. The company also has 50% interest in Cash & Go, which operates 40 check-cashing kiosks in convenience stores. More recently, First Cash has begun operating auto dealerships focused on the buy-here/pay-here segment for used vehicles.

Consequently, First Cash has diverse revenue streams: pawn retail merchandise, service charges, scrap jewelry sales, auto sales and finance charges, and short-term advances. However, First Cash still gets more than 60% of its revenue from the pawnshop business.

Business is booming
In the fiscal fourth quarter, revenues increased 47% to $88 million, and same-store sales increased 9%. An especially big boost came from First Cash's acquisition of buy-here/pay-here retailer Auto Master. Earnings were up 30% to $0.30 per share, marking the company's 24th consecutive quarter of double-digit earnings growth. Because of its strong cash flows, First Cash was able to internally finance its store expansion, even as it bought back $25 million of its stock during 2006.

First Cash certainly has its risks. Government regulations can be a headache, and the company faces plentiful competitors, including EZ Corp (NASDAQ:EZPW), Cash America (NYSE:CSH), and QC Holdings (NASDAQ:QCCO). Despite all this, First Cash still has been able to remain competitive. The tough regulatory environment even creates a barrier to entry for potential competitors.

CAPS weighs in
The Motley Fool CAPS community certainly likes First Cash, giving it a four-star rating. There are 163 outperforms and only 5 underperforms; among All-Star CAPS players, First Cash gets 57 outperforms and two underperforms.

Look at what CAPS member docterek has to say about the company: "Great ratios, quick collection rates, tons of cash, and operating in an industry that's about to boom. Plus new ventures into automotive pawning will be huge over next 5 years."

Cashing in on First Cash
What's your opinion on First Cash? Would you pawn some valuables to buy this stock? Give us your take by joining the CAPS community, and share your thoughts in the Motley Fool's new investor intelligence community.

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Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 1,623 out of nearly 21,000 CAPS players.