Carfinco Income Fund is a hot stock market item. This Edmonton based firm, started more than ten years ago, offers loans to people who have had a run of bad luck. They may have lost homes, cars, used up their savings or may have filed bankruptcy. In short they are high risk. What Carfinco does is offer high interest loans to this group, even though the delinquency rate is roughly 12 percent.
Though that does mean that the firm did have a couple of rough years during the recent 2007 to 2009 economic meltdown, the rebounding of the economy is causing Carfinco’s stock to rebound as well. In early 2009 Carfinco stock was selling at 32 cents a share. As the first quarter of 2010 winds down, that stock is now worth $3.19 per share on the TXS, a growth of 695 per cent.
Two brokerage firms, Industrial Alliance Securities and GMP Securities consider Carfinco to be a hot enough buy to predict a target price of $4.00 per share within 12 months. Not bad for a company started by a cattle rancher who delves into a risky financial sector.
There are plenty of customers out there and little competition. U.S. firms offering similar services have gone back home to take care of issues in the states. That left Carfinco with a huge market to service.
Carfinco does not market itself to the public but rather is a referral from mostly car dealerships. The average loan is $12,000 and the interest rate is just over 29 percent. As Canadians recover from a rough 18 months, this type of loan is one way to work on repairing damaged credit that may have suffered a hit through no fault of their own.