QC Holdings, Inc. (QCCO)

QC Holdings initially began operations as a rent to own business but in its recent avatar known more for its pay day business where it disburses loans to working, middle-income individuals. The industry is highly fragmented with low barriers to entry. Only 37 states in the U.S. have legislation permitting the operation of a payday loan business and characterized by strong seasonality.

During the fiscal year 2006, its revenues grew 12.7% and entered the year 2007 spotting significant potential in the retail financial services credit industry. It has embarked on an operational excellence program focusing more on driving revenue volumes, maintaining operational efficiency and controlling cost. The company is spending more on marketing campaigns including print and broadcast advertising with a wide variety of tactics to improve top line revenue growth. Moreover, it has resorted to market research which enables to better understand the purchase decisions of the customers.

It is continuing to develop a wide variety of revenue stores, online loans, debit cards and others to drive revenue diversifying products and services offering. The year 2007 would have 20-30 new branches and has plans of closing 35 branches, which are not profitable and affected adversely by regulatory hurdles. The acquisition of matured branches 51 Express Check Advance in South Carolina seems sensible due to it being in operation for three years contributing immediate cash flow without any additional expenses.

QC Holdings is working with its lobbies, international and state association to address challenges, create opportunities and support favorable lending legislation and regulation across the country. A recent report by Federal Reserve Bank of New York stating payday advances provide consumers a critical choice for managing short-term financial challenges as opposed to a form of predatory lending comes as a solace. The company has had a total turn around in the past fiscal year and is a promising stock to own.