The Federal government has already been handing out holiday treats this season. Most recently, that included a GST/HST “vacation.” The GST vacation is a holiday season delight for Canadians, offering a brief reprieve from the Goods and Services Tax (GST) as well as the Harmonized Sales Tax (HST) on select purchases. Introduced to stimulate spending during the festive period, this initiative gives consumers more bang for their buck. Imagine snagging that perfect holiday gift or indulging in a family outing while keeping a little more cash in your pocket. It’s not just a treat for shoppers. It’s a nudge for local businesses, giving them a festive season boost.
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The vacation
The temporary GST/HST suspension, set to run from December 14, 2024, to February 15, 2025, will apply to a selection of goods and services commonly purchased during the holidays. Items like children’s clothing, shoes, toys, diapers, restaurant meals, beer, wine, Christmas trees, video game consoles, and snack foods will qualify for the tax relief. This initiative is expected to save Canadian consumers approximately $1.6 billion during the two-month period, making seasonal essentials and celebratory purchases more affordable. However, this proposal still requires parliamentary approval to take effect.
The second measure is a one-time $250 payment, which will be distributed to Canadians earning up to $150,000 annually in 2023. With an estimated 18.7 million people eligible, the initiative is projected to cost $4.7 billion. The payment is slated for early 2025 and aims to assist individuals and families in coping with increased living expenses.
Start saving
Now, what to do with those savings? Instead of splurging on the latest gadget, why not consider investing in a solid growth stock? In that case, goeasy (TSX:GSY) is a strong option. Known for its robust performance and generous dividends, GSY could be the gift that keeps on giving. With record-breaking third-quarter (Q3) 2024 results, including a revenue jump of 19% year over year and net income surging by 28%, this consumer finance company shows no signs of slowing down.
GSY has mastered the art of providing financial services to Canadians with non-prime credit. This isn’t just a niche but a necessity. In Q3, it achieved a staggering $839 million in loan originations, up 16% from last year. The loan portfolio also expanded to $4.39 billion, a 28% increase, demonstrating strong demand for their services. Its efficient operations and an impressive 41.7% operating margin are the hallmarks of a well-oiled machine.
For investors, GSY’s share price currently hovers around $171, and with a forward price-to-earnings ratio of 8.43, it appears undervalued. This presents a golden opportunity to buy into a company poised for sustained growth. Analysts project a 25% annual revenue growth over the next three years — significantly outpacing the industry average of 12%. That’s a lot of potential packed into a single stock.
Even more reasons
The dividend is another reason to love GSY. With a forward annual dividend rate of $4.68 and a yield of 2.74%, it’s a solid choice for income investors. But what sets GSY apart is its low payout ratio of 27.26%, leaving plenty of room for dividend growth. Think of this as reinvesting your GST savings into a future stream of income, compounding over time.
GSY’s focus on secured lending has been a game-changer. With 45% of their portfolio now secured loans, it’s enhanced stability and credit performance. While some may balk at the company’s debt-to-equity ratio of 292.63%, it’s important to note that this is typical for financial services companies leveraging loans to drive growth.
Bottom line
As a Canadian, reinvesting GST savings into a company like GSY doesn’t just benefit your wallet. It’s a nod to the strength and resilience of homegrown businesses. You’re not just shopping smart. You’re investing in a piece of Canada’s economic fabric.
So, this GST vacation, treat yourself to more than holiday cheer. By choosing to invest in GSY, you’re setting the stage for financial growth that lasts well beyond the season. While you’re enjoying the tax break, consider giving yourself the gift of compounding returns. A smart investment is truly priceless.
