• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / Recent / Fringe Banking and Cash America International (CSH)

Fringe Banking and Cash America International (CSH)

August 20, 2008 by John Jagerson

Fringe banking centers seem to be continuing to take over strip malls all over America. These location offer small short-term loans in a variety of formats for usurious interest rates. These “fringe banking” centers are more commonly known as check cashing, pawn, payday-loan and cash-advance shops, and are usually small while offering a narrow but easy to understand product line.

In some ways they act like banks providing access to capital, lending facilities and a physical location but they are obviously different in many ways. Some of those differences may be a good thing for investors looking for a way to invest defensively when the credit market is tight, and there appears to be no end in sight for the distressed economy, stretched by mortgage failures, oil price shocks, falling employment and plummeting home values.

I will admit that the business models employed by these businesses are distasteful for some investors, but as sources of emergency capital, a loan from a fringe bank may be preferable to late fees or non-payment problems. Like most financial products the real problems for consumers emerge with overuse and abuse of the credit offered by these companies. Fringe banking facilities are alternatives that will be more attractive to more people when the economy is in decline, need for emergency funding is on the rise, and credit liquidity is tight. That all sounds very much like what is going on today.

Within the fringe banking sector I have liked Cash America International
(
CSH |
Quote |
Chart |
News |
PowerRating)
and they still look good today for the same reasons. From a fundamental perspective, they have performed well above their sector’s average and TTM growth rates are 22%; compare that to the S&P 500 average of 13% over the same period. In a capital intensive industry their ROE is equal to the S&P average but way above their industry sector, which indicates effective use of assets and likelihood for continued profitability. I believe that fundamental strength in this industry is particularly important because these stocks are not immune to the financing problem plaguing the financial industry at large. The better managed firms are much less likely to be disrupted by the larger economic issues facing the industry.

We may not like the fact that there is an increased need for emergency financing in the U.S. but as long as that demand continues to raise, this should be a very defensive play during a period of uncertainty. This stock may make a sensible addition to a well diversified portfolio in order to take advantage of the volatility within the consumer market.

CSH Daily Chart

John Jagerson is an active trader and one of the principle analysts at www.learningmarkets.com, a leading investor education site featuring free video courses on stock, option and forex investing.

Filed Under: Recent, Trading Lessons

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

New Book From Larry Connors and Chris Cain, CMT – "The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk"

We’re excited to announce the release of a new investment book written by Larry Connors and Chris Cain, CMT. The book, “The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk “ combines… Hedge fund legend Ray Dalio’s brilliant insight into combining uncorrelated strategies… With new, minimally correlated, quantified, systematic strategies to trade… [Read More]

Buy The Alpha Formula Now

Connors Research Traders Journal (Volume 57): 7 Real-World Reasons Why Short Strategies Should Be Included In Your Portfolio

In our new book, The Alpha Formula – High Powered Strategies to Beat the Market with Less Risk, we show the benefits of including short-strategies in your portfolio. As a reminder, building portfolios should be based on First Principles – otherwise known as truths. These truths are: Markets Go Up Market Go Down Markets Go… [Read More]

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2023 · News Pro Theme on Genesis Framework · WordPress · Log in