My thoughts on Propel are much the same as Goeasy. The company is thriving in a weaker economy as more and more people tab into the sub-prime market because of the cost of living crisis we face here in Canada and to a lesser extent the United States.
There is a fine line here between the economy being weak enough that it sustains sub-prime growth but the economy not getting weak enough that the bottom falls out and the loans begin to default at a higher rate.
Propel is still relatively cheap here if it can keep up its expected growth rates. However, I cannot express enough how volatile this stock would be if the situation got a bit rough from a loan default standpoint, the US economy/Canadian economy going into a full recession etc.
In 2021 this company drew down 57% from its highs due to the 2022 bear market. In the event of a severe recession in both Canada and the United States, I would say a 57%~ drawdown would be conservative.
On the flip side, if policy makers navigate their way through this, get a soft landing when it comes to the economy and steady inflation, the high cost of living will continue to drive more people to the sub prime market which will ultimately fuel earnings growth.