The Financial Post reports in its Saturday edition that there has been lots of takeover action in the Canadian small/mid cap space over the past two weeks. The Post's Peter Hodson writes that we have seen the privatization offer for AGT Food Ingredients, a Brookfield takeover of Enercare, and the near-daily overtures toward Aimia. That got Mr. Hodson thinking about what other takeover candidates are out there. He looked for companies that might be in an acquirer's sights one day, either for valuation or strategic reasons. One potential candidate is goeasy.
This is a pure valuation call. Even with a 17-per-cent gain so far this year, goeasy shares trade at just 11 times earnings. That valuation might be acceptable for a boring, slow-growth company, but goeasy revenue grew 22 per cent last quarter, as did operating income. Its easyfinancial division showed 35-per-cent growth. It released preliminary data recently, indicating its loan book grew 61 per cent in the second quarter (it reports Aug. 7). Insiders own 6 per cent and have been net buyers of stock this year. It might be a good target for a bank or an alternative lender, or one of those fancy new fintech companies with ridiculously high comparative valuations.
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