MENU

This stock is up 1,140% since 2008

Sometimes the ugliest businesses are the best performing.

Take “receivables management” company Credit Corp (ASX: CCP). The company’s core business, per that euphemism, is to buy overdue consumer debt and then try to collect on it. Credit Corp isn’t alone in this space — smaller competitor Collection House (ASX: CLH) does much the same thing – but it’s arguably Australia’s dominant play on this line of business.

A 1,140% return in five years

You might be inclined to feel squeamish and look away, but first, consider Credit Corp shares’ returns. The company’s stock is up a stunning 1,140% in the last five years, not including dividends, compared with a meager 5% return in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO). This is down to not only the profitable nature of the business but also to a deeply discounted share price circa 2008.

Of course, the question for investors today is whether Credit Corp can succeed in the future – whether the company can keep growing.

And the answer looks to be yes. Credit Corp has recently expanded into the comparatively massive receivables management market in the U.S. Despite some short term uncertainty in this new line of business, the long term future should be positive, considering Credit Corp’s conservative approach to the expansion and its expertise in the field.

The company has also expanded into the consumer-loans business in Australia. The loan book is already nearly $19 million, and the company reports that it has additional related products in “pilot” mode that are seeing solid results.

The takeaway for Foolish investors

On the promise of these new business lines as well as the strength of Credit Corp’s core business, the company’s shares should beat the market over the medium and long term. That such a promising company is still so underfollowed helps create the opportunity – Credit Corp shares are no retail investor favourite, and trade for just over 14 times earnings while paying a fully franked dividend with a yield in the 3.7% range.

If you’re in the market for another great investment idea, don’t miss this! Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool writer/analyst Catherine Baab-Muguira owns no shares in any company mentioned in this article.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!