The Stock for a Jobless Recovery

Focus: STOCKS

Ian Wyatt Image Ian Wyatt Publisher & Chief Investment Strategist, Wyatt Investment Research

Big financials are an investing wasteland at this point, but there are pockets of great value in financial services for cash-strapped consumers, notes Ian Wyatt of Small Cap Investor.

High unemployment continues to plague the US economy.

According to the Department of Labor, the official unemployment rate recently increased to 9.2%. It's tough to imagine the illusion of a recovery extending much longer when millions of people are unemployed.

And it doesn't take a market expert to absorb all of the aforementioned economic data and come to the conclusion that the US economy is in trouble.

So the question as a small-cap investor—or any investor for that matter—is, how can we profit from high-unemployment and a struggling economy?

It stands to reason that pawn shops would do well during economic hard times.

I have found a small, burgeoning company that performed well during the last recession, and continues to perform well as high unemployment lingers.

Texas-based First Cash Financial Services (FCFS) has a stronghold on the pawn shop and cash-advance businesses.

With a market cap of $1.2 billion and 627 stores scattered throughout the US and Mexico, First Cash Financial Services offer the traditional pawn shop services plus cash advances.

Typically, an individual goes to a pawn shop when he needs quick cash. As you can imagine, during tough economic times, pawn shops benefit from people in need of cash to pay bills and feed their families.

And even though pawn shops are known as being the middleman between sellers and buyers, this is not where most of their money is made.

 
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