Three Pawn Shop Stocks - Where Business Is Booming

If you are looking for recession and depression resistant stocks, one option is High Cash, No Debt, High Yield Stocks. However, another option is to buy the stocks of publicly traded pawn shop chains. A pawn shop is basically a company that provides a small loan at a high interest rate with a personal item put up as collateral. The item can be anything from a guitar to a TV to a diamond ring. Pawn shops have been reporting that business is booming, and that more and more middle class and upper class people are taking advantage of their services.

Here is a list of a few publicly traded pawn shop companies worth checking out:

Cash America International, Inc. (CSH) is a Fort Worth, Texas company founded in 1984, which owns about 500 pawn shops in 22 states. The stock has a P/E ratio of 8.5 and a PEG ratio of 0.66. They also pay a yield of 0.50%.

EZCORP Inc. (EZPW) is an Austin, Texas based chain of pawn shops. It has over 290 pawn shops in the US, and over 90 shops in Mexico. The stock has a P/E ratio of 12 and a PEG ratio of 0.5.

First Cash Financial Services Inc. (FCFS) is an Arlington, Texas based company with over 275 pawn shops. The stock has a forward P/E ratio of 12 and a PEG ratio of 0.84.

Besides pawn shops, another industry that may be considered recession resistant is the big pharma stocks.

Disclosure: Author does not own any of the above.

Comments

[fatcat:]

A pawn shop is basically a retail business...people pawn their stuff,and it must be sold to a consumer,at a bargain price.Gold is another matter...it can be scrapped at a nice profit.

As a person involved in the pawn business,I can tell you,it needs to be a closely held operation......there are many leaks that can happen...

Jan 18 01:10 PM

[Alan Fisher:]

Fatcat,
Can you provide some detail as to why they're better as closely held operations?


On Jan 18 01:10 PM fatcat wrote:

> A pawn shop is basically a retail business...people pawn their stuff,and
> it must be sold to a consumer,at a bargain price.Gold is another
> matter...it can be scrapped at a nice profit.
>
> As a person involved in the pawn business,I can tell you,it needs
> to be a closely held operation......there are many leaks that can
> happen...

Jan 18 02:11 PM

[Urbane Gori...:]

I bought some EZPW after a retracement, as the thesis sounds very good. However, I was quickly stopped out on open for no apparent reason at the time. After a lot of digging, apparently Obama has stated that he will actively pursue a reduction in what he considers to be usurious rates imposed by the above companies. He is looking at imposing a maximum 36% (If I remember correctly - Do check up on this.. ) per annum rate. Gee! That doesn't sound like a hardship, does it? Well it does if you have been collecting an effective 300% rate as established in court cases in various States (Texas I do remember... Might also have been Florida... )


I might add that storage facilities and truck rentals are also good possibilities and some of the storage facilities pay a hefty 9% dividend... Who knows, we may well be living in those little 5X8 rooms pretty soon... "You done good! Dubya!"

jegan ;-)

Jan 18 07:39 PM

[granger:]

Double your investment return, go shop there.

If you know what you are looking for, there are some incredible deals. My father inlaw has been buying up power tools for his business like crazy.

Jan 19 02:33 PM

[dynamutt:]

pawn is a sleepy yet profitable business, especially since gold prices are high. but, all of these pawn shops also have payday segments (which fueled all their growth in the boom times). the obama administration has talked about extending the rate cap currently available for military personnel (36% APR) to everyone.

the payday loan industry is going to be legislated out of business. the idiots that run these payday companies have failed to reach a fair compromise with the industry's critics and are now going to pay the price.

Jan 19 06:19 PM

[Harry Lacheen:]

Over half FCFS's locations are in Mexico, out of Obama's reach.

Feb 01 05:34 PM

[Ames Tiedeman:]

This is yet another growing Austin, Texas based company with a long history. They are in an ideal spot given the financial calamity soon to hit America.

Feb 21 09:40 AM

[GoGabo:]

I'm looking for top C-Level candidates to run a pawn shop business in Mexico. If you know someone that might be interested, please feel free to contact me at [e-mail] or at 619-427-2310 Ext. 17. Thank you.

Aug 11 09:27 PM