December 17th, 2009

Those Other "Banks"

While we’re all sitting around waiting for the wind to pick up (if you don’t know what I’m referring to you didn’t read yesterday’s posting) you might want to take a look at a little corner of the financial world, some of the companies on the Credit Services Industry Group. If we were on Wall Street’s sell-side (those are the guys who go out and pitch stock ideas to institutional investors) we might make up favorable stories about:

  • the improving economy allowing these stocks to be on the verge of making a comeback, or
  • these companies stepping into to fill the gap that’s opened as a result of the real estate lending problems of the banks, or
  • the continually increasing slope in the yield curve offering these lenders’ profit margin improvement for the first time in several years.

But if we’re technical analysts who look at the charts, we might see accumulation taking place. We might see that the excess supply of stock is being absorbed into stronger hands and enabling these stocks to show some signs of emerging upward price momentum.

Here’s what I’m talking about:

  • CACC (Credit Acceptance Corp): An auto loan provider that has just broken into all-time new high territory. [in full disclosure, I just purchased the stock]
  • EZPW (Ezcorp): small consumer loans through pawn shops (also sells merchandise forfeited by borrowers). Stock has been in a horizontal channel for nearly 3 years. An upside breakout would put stock in all-time new high territory.
  • FCFS (First Cash Financial): another pawn shop operator. Stock is also about to break into all-time new high territory
  • NEWS (Newstar): provides debt financing solutions to middle-market businesses and commercial real estate borrowers. Stock is close to completing an ascending triangle reversal bottom pattern.
  • SLM (SLM, the old Student Loan Marketing Co., or Sallie Mae): loans to …. students
  • STU (Student Loan Corp): competitor in student loan market

Needless to say, I selected these stocks strictly because of their interesting charts; further research and discrimination among them I leave up to you.

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