Credit cards are a double-edged sword. Used Foolishly, they can bring convenience to your life. Used foolishly, they can cause lots of problems. Given America's tremendous addiction to credit, as evidenced by soaring average credit balances, I was intrigued to learn about Asta Funding (NASDAQ:ASFI).

Asta, along with competitors NCO Group (NASDAQ:NCOG), Encore Capital Group (NASDAQ:ECPG), and Portfolio Recovery Associates (NASDAQ:PRAA), is a "consumer receivables asset management and liquidation company." In other words, it profits from people who can't pay their high credit card bills. Asta and the others purchase distressed receivables, which are credit card bills that companies like VISA and MasterCard have given up trying to collect, for $0.03-$0.05 on the dollar and then go hire lawyers to collect them. It may not be pretty, but business is booming. (Note: You need a Wall Street Journal subscription to see this article.)

Asta reported a fantastic fourth quarter, with revenue and earnings growing 32% and 52%, respectively. Management was very upbeat, touted the competitive advantage of its business model, and talked about all of the shareholder value it is working to create. But then again, don't most managers speak this way?

With such a great quarter and a great year, I wondered why the price didn't react more. Does the price already discount the expectations? Maybe, maybe not.

Company Price/Book Return on Equity Debt/Equity
Asta Funding 2.4 22% 0.05
Encore Capital Group 5.5 29% 0.40
NCO Group 1.2 9% 0.40
Portfolio Recovery Associates 3.8 20% 0.02

Using the table above, the best comparison is to Portfolio Recovery Associates, as both companies do not use much debt. Compared to Portfolio Recovery, Asta sports a lower price/book ratio despite having a slightly higher return on equity. Thus, it looks like there is still some room for the price to advance, especially if Asta can keep generating good returns. Two other things jumped out at me as well: insiders own about 50% of the outstanding shares and there is little coverage by Wall Street analysts. Sounds like a possible Hidden Gem to me.

With Thanksgiving right around the corner, I am thankful that my wife is a frugal spender, a good saver, and pays off the credit card bill every month. It keeps companies like Asta Funding away from our door and gives us the opportunity to put them in our portfolio instead.

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Fool contributor David Meier does not own shares in any of the other companies mentioned, but he hopes you have a wonderful Thanksgiving.