I hope you had a nice long weekend. Today’s Daily Alert features a high-potential small-cap stock from the small-cap specialists at The Oberweis Report.
“Consumer Portfolio Services, Inc. (CPSS, $3) is a specialty finance company focused on purchasing and servicing retail automobile contracts originated primarily by franchised automobile dealers and, to a lesser extent, by select independent dealers in the U.S. in the sale of new and used automobiles, light trucks and passenger vans. Through their automobile contract purchases, they provide indirect financing to the customers of dealers who have limited credit histories, low incomes or past credit problems, referred to as sub-prime customers.
“The company serves as an alternate source of financing for dealers, facilitating sales to customers who otherwise might not be able to obtain financing from traditional sources such as commercial banks, credit unions, and the captive finance companies affiliated with major automobile manufacturers. The company focuses its marketing on dealers, rather than directly to consumers, through their marketing representatives that call on and establish relationships with dealers. As of December 31, 2011, approximately 89% of the automobile contracts purchased under the company’s programs consisted of financing for used cars and 11% consisted of financing for new cars. The company’s business is diversified across a large number of dealers, as no single dealer accounted for more than 5% of the total number of automobile contracts purchased. Dealers typically send credit applications to them electronically, either via the company’s website or through a third-party application aggregator.
“In the company’s latest reported first fiscal quarter, sales increased approximately 42% to $44.2 million from $31.2 million in the first quarter of last year. Consumer Portfolio Services reported earnings per share of $0.05 in the latest reported first quarter versus a loss in the same quarter of last year. ... Buy.”
- Jim Oberweis, The Oberweis Report, September 2012