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I have 33 consecutive profitable trades of 15% or better. How is this possible? Every day there are hundreds of stocks setting new highs, no matter what happens in the overall market. Many of these stocks are still at very reasonable valuations. Afraid of buying stocks at their highs? Think of it this way: a new high is really a future floor for companies with solid financial underpinnings. Quantitative momentum modeling makes it easy to identify stocks that can continue this upward momentum trend. Why does this happen? It's really very simple..ask me about what investors and cows have in common. I am $$$ MR. MARKET $$$. I AM HUGE!!! Bring me your finest meats and cheeses. You can join in on the fun. Register for free and you'll be able to post messages on this forum and also receive emails when $$$ MR. MARKET $$$ makes his own trades. ($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
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  1. #1

    Default ECPG ==> The Thunder Winner

    ($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)

    So you go to a party and drink a thousand beers. You come home and are bored so you go in front of your computer, whip out your credit cards and buy everything you see. Rutro. Thatís called outkicking your coverage. You spend more money than you really have and now you have a credit issue. Who you gonna call?

    Today I bought Encore Capital Group (ECPG) at 59.05. I will sell it in 4 to 6 weeks at 68.21. Hereís why I like ECPG. First of all, I really love this chart:



    ECPG stock is up 87% in the last 52 weeks, yet its PE is only 6. Thatís right, 6! This company is so cheap it makes Fileneís Basement blush. There is no way its stock price can drop, itís so cheap. It can only go up! During five years of share price growth, Encore Capital Group achieved compound earnings per share (EPS) growth of 27% per year. This EPS growth is higher than the 18% average annual increase in the share price. It just keeps getting cheaper and cheaper. ECPG investors should be aware of an increase in enthusiasm from smart money of late. Encore was in 19 hedge fundsí portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. I see what you did here!

    Encore Capital Group is a global specialty finance company with operations and investments across North America, Europe, Asia and Latin America. Through its subsidiaries around the globe, Encore purchases or services portfolios of receivables from major banks, credit unions and utility providers. Customer service and regulatory compliance are at the heart of their business and are implemented through their collections strategy.

    Encore Capital believes that consumers are at the heart of everything they do. Their mission is to create pathways to economic freedom for consumers, and they do that by listening to the consumerís needs and working with them in an empathetic, flexible way that allows them to resolve their debt obligations with a plan that truly works for them. They understand that everyone intends to pay off their loans, but difficult situations do happen to a small portion of borrowers. Thatís why companies like Encore exist. Their business is to help consumers recover financially ó by understanding their situation and tailoring a payment arrangement that works for them. As a result, they help consumers restore their credit profile, which may give them access to the credit they need to buy that home or car or pay for college. By doing that Encore also returns capital to banks and lenders so they can continue lending in a way thatís affordable and accessible to people. As a result, Encore plays a vital role supporting the credit ecosystem in multiple countries.
    This is a necessary service and Encore does it well. Their Q3 performance was driven by strong collections. They are so confident in their own business that they repurchased $88M of ECPG shares over the first three quarters of 2021, which includes $41M in Q3 alone. Their collections of $567M were 5% higher than Q3 last year. The company believes that the explosion in bank credit originated by the pandemic will result in a better market for bad debt in upcoming years. The recent expansion of global credit will result in higher non-performing loans outstanding. That makes sense. Encore Capital will benefit from better deals, higher revenues, and higher ROE thanks to the rise of non-performing loans outstanding. That makes sense. Management also knows that the real difference is made by their ability to properly value the debt they buy through sophisticated models. They purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across their U.S. operations.

    In the last four years the company grew revenues at 8.5% CAGR, net income margin passed from 6% in 2018 to 19% in 2020 and last year ROE was about 30%. The best is yet to come. People needed money during the pandemic, and so turned to banks to get new loans. More loans outstanding means more bad debt. More bad debt means more collectables for Encore. Easy Peasy. The big banks treat Encore as a trusted partner because they can count on them to buy back their bad loans. Smaller competitors looking to crack this market have no chance. (Cue up Vince McMahon walking Ė no chance in hell!).

    Encoreís experience in this spance means they understand how much the debt holders are willing to cough up in order to get their bills paid off. They have quantified all strata of these debt holders so they know the expectations of how long it will take them to get their money back. The secret sauce is in their data analytics. Peopleís behavior can be quantified and their patterns repeat themselves.

    Revenue growth rate is expected to continue and get better each year. If they can maintain the 8.5% CAGR, at these PE levels the stock just HAS to go up. Even a PE multiple of 10 will mean that the stock will reach the high 90ís, well past my target price. Last quarter shows that they are already on the hunt. Encore came out with quarterly earnings of $2.66 per share, beating the ANAL-yst estimate of $2.12 per share. This compares to earnings of $2.31 per share a year ago. This quarterly report represents an earnings surprise of 25.47%. A quarter ago, it was expected that this provider of debt-management and recovery services would post earnings of $2.09 per share when it actually produced earnings of $3.30, delivering a surprise of 57.89%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Just ask Gomer Pyle. Surprise Surprise Surprise!

    What does the boss, Ashish Masih, have to say?

    ďDespite a strong share performance this year, which is up 37% in 2021, we believe we are still undervalued relative to our peers. Our business has continued to generate significant cash and our leverage is now below our target range. Our strategy of focusing on the right markets, executing well to deliver strong returns on our portfolio purchases and maintaining a strong balance sheet are key drivers of our success. This strong track record of success enabled us to begin returning capital to shareholders earlier in the year, and is now helping us accelerate it via the $300 million tender offer. Looking ahead, we intend to maintain a strong financial position that will enable us to increase portfolio purchases when supply starts rising again, as it does in every credit cycle. This will drive Encore's continued success. Thanks for taking the time to join us, and we look forward to providing a fourth quarter and full year 2021 results in February.Ē

    What to do for an Encore? Iíll just take my winnings on this stock pick and run up my credit card!

    I am HUGE!

    $$$MR. MARKET$$$
    =============================

    I am HUGE! Bring me your finest meats and cheeses.

    - $$$MR. MARKET$$$

  2. #2
    Join Date
    Oct 2003
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    Hamilton MA
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    Default

    Good choice, L. P.

  3. #3
    Join Date
    Sep 2003
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    Default

    Nice writeup and excellent pick, $$MM!! I'm in with you at 59!

  4. #4
    Join Date
    Nov 2003
    Location
    ohio
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    Default

    ECPG looks like a great pick.

    ---------------billy

  5. #5
    Join Date
    Sep 2003
    Posts
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    Default

    Anyone else get the messages about a Dutch Auction and Tender Offer for from $52 up to $60 for this stock? Looks like it expires on 12/2.

  6. #6
    Join Date
    Jun 2009
    Location
    Earth (Mostly)
    Posts
    809

    Default

    Quote Originally Posted by jiesen View Post
    Anyone else get the messages about a Dutch Auction and Tender Offer for from $52 up to $60 for this stock? Looks like it expires on 12/2.
    The chart certainly looks like the stock of a company that has been bought.

  7. #7
    Join Date
    Jun 2009
    Location
    Earth (Mostly)
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    809

    Default

    Here you go. Looks like a buy back by the company itself. The share price should start fluctuating again after Dec 2, although there will be a smaller float.

    https://stockhouse.com/news/press-re...to-purchase-up

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