When I last wrote about First Cash (FCFS) in October of 2016,
I thought the shares offered good value despite some elevated risks.
The shares have since risen around 25%, helped in no small part by a
stronger Mexican peso and a solid recent trend in consumer health in
Mexico.
Looking ahead, there are multiple areas
where management could add value, but the move in the share price makes
execution on these items much more critical for ongoing outperformance.
Organic expansion into Colombia is likely to be measured at first
(though management would like to acquire if possible), and the process
of wringing synergies from the Cash America deal is not likely going to
show much until 2018 at the earliest. First Cash shares should still be
able to generate double-digit total annual returns from here (provided
the company hits my high single-digit FCF growth target), but this
remains a riskier-than-average name with significant exposure to
Mexico's economy and currency.
Continue reading here:
FirstCash Management Has Several Opportunities To Execute And Drive Value
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