Credit Acceptance Corporation (CACC). This is an auto finance company. It mainly provides loans to sub-prime borrowers purchasing automobiles. The company’s model is unique in the sense that it partners directly with auto dealers rather than purchase a loan which the dealer originates. CACC structures the deal in such a way that both the interests of the dealer and CACC are aligned and both receive upside if the loan does well. Therefore, CACC’s risk levels are much lower. Additionally, the current market downturn will likely weed out weaker players who have been under-pricing loans and provide a long-term growth runway for CACC.
The long term monthly chart for CACC shows a clear and consistent uptrend which sustained until the year 2019. For about a year in 2019 and early 2020, the stock declined from $500 to $200, a drop of 60%. The fall in price took the price below an important support level at $377.
In July of this year the stock briefly again breached the $500 level before retreating back down to just below the $300 level. We believe the stock to be a good buy at this level. With s stop loss below the long term support at around the $200 support level.
Entered into our long term tracking portfolio today as follows: Entry point $299.55, stop loss placed at $197.75 and short term to medium take profit set at $540 giving a profit of 80%.
On the video and images above you will see the reason this stock was selected.
You will see the image is of a monthly chart of the stock showing the long-term upwards trend formed over the years. You will also see the entry point and the where the stop loss is placed. For more information please watch the video given.
Once it is time to move the original stop loss up you will see an additional image.