While Associated Press Economics writers like Christopher Rugaber and Paul Wiseman, as seen in a post this morning (at NewBusters; at BizzyBlog), talk of "baffled economists" and a job market that is "defying history," one AP writer, in discussing stocks which have done well in this economy, has revealed what employment prospects really are with quite un-baffling certainty from the point of view of those who have to put their money where their expectations are, i.e., investors.
The wire service's Bernard Condon cited a pawn shop operator, a payday lender, a debt-collection firm, and a rent-to-own outfit as companies which have outperformed the market and are expected to continue doing so. The reason for the expectation is found in the title of this post, which is also seen in the following excerpt from Condon's composition:
How bad is it? Pawn shops, payday lenders are hot
As the jobless rate inches up and the economic recovery sputters, investors looking for a few good stocks may want to follow the money - or rather the TV, the beloved Fender guitar, the baubles from grandma, the wedding ring.
Profits at pawn shop operator Ezcorp Inc. have jumped by an average 46 percent annually for five years. The stock has doubled from a year ago, to about $38.
... In investing, it's often better to focus on what you can safely predict, even if that safety is found in companies that thrive on hard times. One good bet: The jobless aren't likely to find work anytime soon. And companies profiting from their bad fortune will continue to do so.
B-B-B-But I thought the president told us three months ago that "We are turning the corner." And of course, there's been no shortage of Associated Press and other wire service reports telling us that the economy is on the "rebound" and that the joblessness problem is a result of "temporary factors," blah-blah-blah-blech.
Not so, as Condon explains, because when it comes to putting one's money where the greatest expected returns are, the companies whose prospects are bright are those which work with the financially at risk or cater to the growing number of Americans who have become misers by necessity:
- Stock in payday lender Advance America Cash Advance Centers (AEA) has doubled from a year ago, to just under $8. Rival Cash America International Inc. (CSH) is up 64 percent, to $58. ...
- Profits at Encore Capital Group, a debt collector that targets people with unpaid credit cards bills and other debts, rose nearly 50 percent last year. Encore has faced class action suits in several states, including California, over its collection practices. The Minnesota attorney general filed a suit in March. No matter. The stock (ECPG) is up 59 percent from a year ago, to more than $30.
- Stock in Rent-A-Center (RCII), which leases televisions, couches, computers and more, is up 57 percent from a year ago to nearly $32. Nine of the 11 analysts covering the company say it will rise further and that investors should buy it.
The idea of investing in companies catering to the hard-up might not be palatable to some people. But it is profitable.
Memo to Chris Rugaber and Paul Wiseman: It's also not baffling and certainly doesn't defy history.
Cross-posted at BizzyBlog.com.