First Cash Financial Service (FCFS): Trading with a forward P/E of 10.2, First Cash operates 94 U.S pawn stores and 160 U.S short-term loan stores. First Cash is also positioned to capitalize off of the slowing Mexican economy, as Mexico’s gross domestic product will likely shrink by 1.6% in 2009 hurt by the fact that almost 80% of Mexico’s exports are sent to the slowing U.S economy. First Cash is the second largest pawn-shop operator in Mexico, operating north of 200 stores. As of December 2008 First Cash’s revenue from continuing operations was broken-down as follows: 40% or $140 million dollars comes from Mexican pawn shops and short-term loan stores located in Mexico, 41% or $134 million dollars comes from U.S based pawn shops, and 19% or $60 million dollars comes from U.S short-term loan offices. Gross profit from continuing operations for 2008 was broken-down as follows: 40% or $81 million dollars from Mexican pawn shops and short-term loans, 39% or $79 million from U.S based pawn shops, and 21% or $43 million dollars from U.S short-term loan offices. For the full year of 2008, First Cash’s earnings per share were up 35%, same store sales were up 13%, total revenue was up 19%. From 2004 to 2008 earnings per share went from $0.55 to $1.26 in 2008, which equates to a 23% compounded annual growth rate. EBITDA a measure of the firm’s profitability during that same time period went from $34 million to $72 million a 24% compounded annual growth rate.

Cash America International (CSH): Trading with a forward P/E of 4.59, Cash America is sitting right on its 52-week low offer investors an interesting opportunity going forward. Cash America operates in a slightly different manner than EZCORP and First Cash as Cash America’s business is principally based on small single payment loans secured by the borrowers personal valuables and unsecured loans in which Cash America charges hefty interest rates sometimes north of 50%. While 30% of all secured and unsecured loans are unredeemed, meaning the borrower never pays Cash America back, Cash America gets to keep their client’s assets having the potential authority to sell their precious items in the open market. With gold near the $1,000 per ounce market, think of Cash America as a public fort-knox. Operating income from 2003 to 2008 went from $42 million to $149 million, which represents a 28.9% compounded annual growth rate. Earnings per share went from $0.83 to $2.70 per share, which represents a 26.6% compounded annual growth rate during the same time span. On January 21st 2009 shares of Cash America fell 20% after reporting that the firm expected a 15% drop in fourth-quarter net income, as it has been hurt by lower cash advance revenue. The company also lowered also its 2009 earnings estimate to between $3.10 and $3.30 per share from its prior view of $3.35 to $3.55 per share, citing a weak overall economic climate for the consumer. While this was a short-term blow for the company, management is still forecasting earnings of at least $3.1 to $3.30 per share for 2009 which means at $15.78 Cash America is trading at a historically low valuation of just 5.09x full-year 2009 earnings.

EZCORP (EZPW): Trading with a forward P/E of 7.22, EZCORP beat Wall-Street’s estimates and forecasted 2009 profits of $1.52 which is $0.04 higher than the average analysts’ estimates for 2009. First-quarter profit rose 18 percent, propelled by double-digit revenue growth. EZCORP also forecasted second-quarter earnings of about 36 cents per share, up from 30 cents per share earned just last year. EZCORP operates 294 pawn shops in the United States and 30 pawn shops in Mexico. For the full year 2008 pawn shops accounted for 71% of EZCORP’s total revenue.

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