CPSS
I brought CPSS today aggressively in the low 3.80's AVG. Here is what I like.
1) CPSS first and foremost and why I have changed my mind on this stock is because delinquencies have not only stabilized, but have shown slight improvement in the last couple of quarters. Asset quality to me is a very important factor when looking at financials, and the fact that the situation has stabilized and improving is a big factor.
2) CPSS is cheap, they earned .25 last quarter, and I expect .26-.29 in q3, and .27-.30 in q4. Which means if I'm correct they are trading at a PE of roughly 3 going foward which is absurdly cheap. CPSS should never get a high PE, but a PE of 6-7 is about right, hence the stock is waaaaaaaaaaaay undervalued and has ton of upside in my opinion.
3) CPSS trades at a huge discount to book value.
4) CPSS has been aggressively buying back shares and this is perhaps a very overlooked factor Plenty of companies announce a buyback and do nothing. What has CPSS done brought over 700k shares in q1, and brought almost 1 million in q2. I see no reason why at these prices that pace won't continue, hence not only does it act as good buying support, but that is dropping the share count roughly 3% sequentially each quarter, hence why I expect earnings to improve going foward on two front, lower share count, and better delinquencies leading to improved results on the net income side.
Conclusion: I will continue to buy CPSS on weakness, and think their is limited downside here, with a decent amount of upside potential at current price. All is just my opinion, and I could always be wrong though.
