Long term outlook for PRL is fairly bullish. However, the short-term environment is extremely rocky.
Last year, I removed Goeasy Ltd from the Bull List when it broke the $200 level. I felt with the health of the Canadian economy, these alt lenders were going to face some substantial pressure. Fast forward 12-18 months later and this looks to be the case.
Propel is a US-based alternative lender, so the environment is a bit different but also the same. Alt lenders tend to do well when the economy is teetering on the edge. Not good enough that people are doing well enough and don't need alt lenders, but not so bad that those who are struggling start to default on their alt lending payments.
What we are seeing now is Goeasy Ltd. THe company is reporting an escalation of provisions and a decline in overall earnings.
I do think both these companies will eventually be buys. It is highly likely they make a return to the Bull List. However, I am very hesitant to do it now until we see results start to normalize. I'd rather miss a little bit of the bottom than try to time the bottom and end up seeing these alt lenders take more of a haircut.
60%,70%+ drawdowns during harsh recessions are not out of the question with these lenders.
Watchlist stocks right now for sure.