North American investors are mesmerized by NVIDIA (NASDAQ:NVDA) because of its dominant industry position and meteoric rise. Market analysts said the artificial intelligence (AI) revolution fueled for chip designer’s market cap to US$2.25 trillion.
More importantly, the semiconductor stock has become the yardstick for winning stocks, regardless of sector. At US$898.78 per share, the year-to-date gain and 3.01 overall return in 3.01 years are 81.5% and 507.97%, respectively. The price three years ago was only US$137.72.
Many investors missed out on NVIDIA but would not take positions now. The strong AI foundation assures continuous growth, but the price is too high already. Fortunately, Canadians can invest in Propel Holdings (TSX:PRL) instead. The fintech’s growth trajectory is better, and the potential return could be far superior.
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Stock performance
NVIDIA went public in January 1999, while Propel Holdings started trading on the TSX on October 20, 2021. Currently, Propel investors are up 116.64% year to date and partake in the modest 1.86% dividend yield. The trailing one-year price return is 335.9% versus NVDA’s 214.6%.
Had you invested $6,500 in Propel one year ago, your money would be $28,335.94 today, excluding dividend earnings. The board of directors approved two dividend hikes in 2023.
Fast-growing fintech
Toronto-based Propel Holdings is very small compared to NVIDIA, but the $975.75 million financial technology company displays a high growth rate and solid financial position. Its innovative lending platform extends installment loans and provides credit lines to underserved Canadian and American consumers.
The Financial Times named Propel Holdings one of the top 500 companies in The Americas’ Fastest-Growing Companies 2023 ranking list. In addition to the organic, profitable growth, the ranking was a direct result of its AI-powered technology. Its chief executive officer, Clive Kinross, offered superior products to the underserved consumers that traditional financial institutions locked out.
Kinross added that from 2019 to 2022, Propel’s cumulative annual revenue and net income growth were 49% and 96%, respectively. Launching multiple bank partnerships and new products during the period aims to expand the geographical footprint further.
Exceptional start to 2024
The strong consumer demand led to stellar financial results in the first quarter (Q1) of 2024. In the three months ending March 31, 2024, revenue and net income increased 47% and 77% to US$96.5 million and US$13.1 million compared to Q1 2023. The provision for credit losses (PCLs) and other liabilities rose 36.1% year over year to US$42.4 million.
Because of the strong credit performance across the loan portfolio and another quarter of record results, the board approved a 14% dividend increase. “The strong start to the year reflects both the economic health and resilience of the underserved consumer, particularly in the U.S. and our industry-leading AI technology platform that continues to bring more consumers,” said Kinross.
Differentiators and growth drivers
According to management, the AI-powered technology and a compliance-first approach are differentiators and growth drivers. continue to be the differentiator and driver of growth.
The addressable market of around 70 million in North America alone and the robust business development pipeline should “propel” the stock price higher. This Canadian fintech is well-positioned to outshine and outperform NVIDIA.
