Saturday, March 22, 2014

Can You be a Stock Star with Pawn Shop Stocks?

Recently, Celebrity Yahoo posted a video of the house of 'Pawn Stars' star Rick Harrison. It certainly shows that there is definitely money in the pawn shop business.  So if investors want to jump on the bandwagon, what should they do?

The pawn shop business is one of the few areas that does well in both good and bad economies, as there are always people who need to borrow against or sell some of their possessions. According to, there are about a dozen stocks involved in the pawn shop industry and related businesses, such as payday loans, companies are often referred to as 'Desperation Stocks.'  When individuals need money and they can't get a loan from a bank, they become desperate and get a payday loan or they borrow against an item at a pawn shop.

The largest publicly traded company in this field by market cap is First Cash Financial Services Inc. (FCFS), based in Arlington, Texas, which has a market capitalization of $1.5 billion. It has pawnshops in over 800 locations in Texas, Colorado, District of Columbia, Indiana, Kentucky, Maryland, Missouri, Nebraska, Oklahoma, South Carolina, Virginia, and Wyoming, and also in 24 states in Mexico. In addition to pawn loans, First Cash also offers payday loans and title loans on automobiles. The company also buys, gold, silver, and platinum andis a provider of Western Union services. The stock trades at 19 times trailing earnings and 15 times forward earnings. Revenues for the latest quarter were up 5.6%, however, earnings were down 10.3%.

The second largest is Cash America International, Inc. (CSH), a $1.2 billion company based in Fort Worth, Texas. It has over 900 locations in the United States and Mexico with the brand names Cash America Pawn, SuperPawn and Prenda Fácil. The company also offers short-term cash advance loans through the Internet to customers in the United States, the United Kingdom, Australia and Canada. The stock trades at 8.9 times trailing earnings and 8.8 times forward earnings, and even pays a small yield of 0.3%. Earnings for the latest quarter jumped by11.5% on a slight drop in revenues.

For a free list of other companies in the pawn shop industry, which includes EZCorp (EZPW) and DFC Global (DLLR), go to The list can be downloaded, sorted and updated.

Disclosure: Author didn't own any of the above at the time the article was written.


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