A Top Growth and Dividend Stock to Buy Right Now

Goeasy Ltd (TSX:GSY) posted record quarterly results. The company is a top growth stock with an increasing dividend that is undervalued.

| More on:

Sometimes off the beaten path is the best way to find value in the market. This is especially true when the market has enjoyed years of bullish activity.

It’s a great feeling when you find a stock that is under-followed and as a result, is undervalued. It allows you to scoop up shares at great valuations. So long as the fundamentals are strong, the market will eventually catch-on and you can cash in.

One such stock, is goeasy (TSX:GSY). If you’re an active reader of my articles, you’ll be familiar with this diamond in the rough. As a general rule of thumb, there are three types of stocks; income, growth and value. This financial services company fits all three.

On Wednesday, the company posted another impressive quarter.

Third-quarter results

Before the second quarter, the company increased year-end and future guidance. At the time, it was a great buying opportunity as analysts had yet to revise estimates. I even made it my top pick for the month of August. Analysts still haven’t caught up. Third quarter results once again beat expectations.

Goeasy posted third quarter diluted earnings of $0.97 per share on revenue of $130 million. On average, analysts we expecting earnings of $0.94 per share and revenue of $100.94 million. This is a 30% plus beat on the top line.

The company’s growth strategy is paying significant dividends. Thanks to its increasing scale, the company posted record quarterly operating income, margins, net income, earnings per share and return on equity.

Performance

Given its smaller stature, goeasy’s share price tends to be a little more volatile than stocks with a large capitalization. Don’t fret: it’s one of the Index’s top performers. Despite trading 17% below its 52-week high, goeasy’s share price has still gained 21% year to date.

Looking further back, it has a two-year return of 84% and its five-year compound annual growth rate (CAGR) is 43%. Outside the tech sector, this type of growth is almost unheard of.

Income investors will also appreciate the company’s rising dividend. The company currently yields around 2% and it has a four-year dividend growth streak. A streak that has a dividend growth CAGR of 41%!

Valuation

Despite double-digit share price appreciation, the company is still undervalued. The company is trading at a forward price-to-earnings (P/E) ratio of only 10.26. It’s therefore not surprising that its P/E to growth (PEG) ratio remains depressed at 0.36.

This means that its share price is significantly lagging behind its expected growth rates. You’d be hard pressed to find a cheaper stock based on expected growth rates.

Foolish Takeaway

The company’s record quarter proved once again why it is a must-own for investors. It has a place in your value, income or growth portfolio. Goeasy is a buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien is long goeasy Ltd.  

More on Dividend Stocks

A meter measures energy use.
Dividend Stocks

Is Fortis Stock a Buy, Sell, or Hold for 2025?

Fortis has increased its dividend annually for the past five decades.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Are Screaming Buys in November

Here are three top dividend stocks long-term investors won't want to ignore during this part of the market cycle.

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Generate $175/Month in Passive Income With a $30,000 Investment

Dividend aristocrats offer reliability, and many of them also offer generous yields. With sizable enough discounts, these yields can become…

Read more »

dividends can compound over time
Dividend Stocks

Best Dividend Stocks to Buy Now for Canadian Investors

These three stocks would be excellent additions to your portfolios, given their solid underlying businesses, consistent dividend growth, and healthy…

Read more »

data analyze research
Dividend Stocks

3 Undervalued Stocks to Watch in November

Not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Perfect TFSA Stocks for Long-Term Growth

Two industry heavyweights are perfect stock holdings in a TFSA for long-term money growth.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Is Fortis Stock a Buy for its Dividend Yield?

Fortis has increased the dividend for 51 consecutive years.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2025?

BAM stock recently jumped after beating earnings. But is it still a buy, or is it better to wait?

Read more »