Portfolio Recovery Associates, Inc. (NASDAQ:PRAA)

hidden gem pick

Whenever you can buy 2Billion worth of debt for 65M you are going to make money, especially as the housing slump continues. This debt collector will earn better margins cuz of these ridiculous prices they're getting on this debt.

Waterhouse.

CAPS "Stock for Wednesday"

cheap like borscht

At 48.70, PE of 16. Forward PE of 13. Growth of around 20% expected in the next couple of years. Consumer debt is at an all time high. The credit crisis related to housing although not directly related consumer debt will likely have an affect on consumers ability to make payments. This will increase the supply for defaulted receivables from CC companies, auto loans and etc. Coupled with the fact that some of the previous defaulted debt buyers, such as hedge funds, are staying away from this area, resulting lower demand. This creates cheaper debt and more opportunities for PRAA. Debt Collection might slow down a bit in the next couple of quarters, but long term when the economy will pick up again. PRAA will collect down the line. I wonder what is in store for Q3 earnings.

Valuation is good. Company is in a good place to capitalize of current credit and debt fears.
Conservatively run company with good management.

good

The U.S. savings rate is below 0%. That's all I have to say.

Lots of solid fundamentals. Those players with liquidity and the ability to buy debt out there right now are going to make a mint as people over-react to the credit crisis and the fringe buyers drop out. Looks like a good entry point.

PRA is in the right place at the right time. The worse the housing market gets the better for PRA.

Following vs101

Better prices for debt and less competition

Current credit crisis plans into few industries; however, bottom feeders are poised to take full advantage of mortgage lenders and banker mistakes.

In the current market of folks bailing on their credit card debt (I recently read that 30% of CC debt is in arrears, if not actual default), I think that these companies will do very well.

Analysts expect the EPS to grow 27% over the next year and 15% going forward. With the current dip in price vs July prices, I think that this company will do very well.

People tend to borrow money and then cannot afford to pay it back - makes sense with any type of portfolio. Look at the US sub-market for examples

Many people live beyond their means. The norm for living seems to include car, cable tv, internet and cell phone. These are fixed costs. Employment can end quickly or unexpected bills hit, pushing the limits of personal finances.

Concerns over troubled consumers are overplayed in stock price. Mgmt is talented and market is filled with well priced distressed assets. Growth story is intact. 20% growth should be maintained for several years.

Great long term pick...