The financial services space is an exciting and diverse sector to invest in. There are plenty of options, from conventional banking and insurance to fintech and information services companies. However, one of the best financial stock to buy for 2021 could be in niche segments like auto loans. One company, Credit Acceptance Corporation, has grown significantly by providing auto financing to subprime customers who tend to struggle to get loans from traditional institutions. The stock price of Credit Acceptance Corporation has grown 3X in 5 years and almost 10X in 10 years. It is among the leaders in the US when it comes to subprime auto lending. The benefit that users get is access to financing. The benefit that auto dealers get is another set of customers to sell to and earn higher revenue.
Credit Acceptance Corporation Announces Q22021 Results
On 29th July 2021, Credit Acceptance Corporation announced its second-quarter 2021 earnings numbers. Its consolidated income rose from $96 million to $288 million years on year. Earnings per share on a diluted basis also rose significantly from $5.4 per share to $17.18 per share. Credit Acceptance Corporation continues to face headwinds arising out of the pandemic situation. The demand for its subprime auto loans has gone down, according to the company’s management. Unemployment benefits and pandemic incentives are tapering down, which is deeply impacting subprime borrowers. Vehicle prices are also on the rise. The collection rates for Credit Acceptance Corporation have slipped from the 70s to the 60s. It was around 66% as of June 2021. However, it was around that number even in June 2019. So, maybe the worst could be over for the company. If you are looking to invest in financial stock 2021, then keep an eye on Credit Acceptance Corporation.
Best Financial Stock To Buy For 2021
Credit Acceptance Corporation’s stock was priced around $60 in September 2011. The price was almost 10X at $596 in September 2021. The stock was trading at a P/E ratio of close to 11.5 on 17th September 2021. Its 52-week high was $671, while its 52-week low was $266.