We cover Goeasy quite a bit here, which is our top pick for a Canadian alt lender. However, Propel is currently doing some amazing things in the United States.
In my opinion, the success of Propel and other alt lenders is primarily on the back of a weakening economy. Most are reporting record applications and record loan originations. I think this is primarily due to how many US/Canadian residents are struggling and having to rely on credit to get by.
This is a tailwind for now, but I do have a bit of fear that it could slow moving forward. Right now, analysts are fairly bullish on the company. They expect earnings to double here over the next few years and if the company can do this it is no doubt undervalued even at these all time high price points.
However if we do get some relief on the interest rate front and consumers maybe feel a bit of relief when it comes to the cost of living, I wonder if loans/borrowing will slow.
I don't expect this to happen in the near near future, as in the next year. But, it could be something that happens over the mid-term.
I am cautiously optimistic the company can continue to grow at the trajectory it is right now. It is trading at nearly 2x the valuation of a company like Goeasy. This is warranted if the growth can keep up. But if it can't, we could see a correction in price.