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  5. CACC: Please analyze these two companies, compare them on profit, growth and volatility. [Credit Acceptance Corporation]
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Q: Please analyze these two companies, compare them on profit, growth and volatility. Which would be the best long term buy.

Thanks for the usual good advice

Asked by Jean on September 30, 2021
5i Research Answer:

Both operate in the consumer finance space, but we think GSY has a stronger relative market position given it is a less saturated market in Canada. GSY has a stronger track record of growth which is expected to continue. CACC also has shown good growth (mostly double digit growth over the last ten years), but saw revenues decline in 2020 and earnings are expected to decline over the next two years. CACC trades cheaper than GSY at 13x earnings vs 17x, but we think GSY's premium over CACC is more than justified. CACC's stock has also been more volatile than GSY. We would side with GSY for a long-term hold.