Financial businesses may be the next driver of the bull market. Interest rates on 10-year treasuries are gradually trending up. The economy seems to be getting back on track as well as vaccinations kick in and business activity intensifies. The ability of borrowers to repay loans is expected to improve, and the net interest margins of lenders may also be trending up. The pandemic has taken its toll on a large portion of the population. Combining the economic distress and the gradual recovery, investors can look at a company like Credit Acceptance Corp as a candidate for financial stocks to buy right now. The company offers auto loans to sub-prime borrowers.
Credit Acceptance Corp Q42020 Earnings Results
On 1st February 2021, Credit Acceptance Corp reported its fourth-quarter 2020 earnings results. Consolidated net income rose from $161 million in Q42019 to $166 million in Q42020. Earnings per share on a diluted basis was $9.43 as compared to $8.6 in Q42019.
According to Credit Acceptance Corp CEO Brett Roberts, “But I think the trends we saw both in Q3, and October and November, is the overall market used vehicle volume, the used vehicle financed volume is pretty stable, even grown a little bit. So we’re obviously down. That would mean we lost share of the market defined as total used vehicles financed.” He further added, “And I think we lost it to others who may see the market differently than we do at this point, or purchasing [Phonetic] more aggressively than what we’re willing to do. Obviously, for — on the incremental customer obviously, we did a lot of business. We have value in those dealers with who we did business. They’re still a niche there for us.”
In spite of the challenging environment, reporting a rise in earnings shows that Credit Acceptance Corp is one of the top finance stocks to invest in.
Finance Stocks To Buy Right Now
Credit Acceptance Corp’s stock is up 75% since the March 2020 market fall. On a longer-term 5-year basis, the stock is up about 85%. The stock closed at $378 on 1st March 2021.