Cash America (CSH)

Stock of the Day
Cash America Intl. Inc.
Wednesday’s Intra-day Price: CSH – $43.09

Sector: Financials
Industry: Consumer Finance
Next Earnings: 7/26/07
52-week Price: $28.76 – $47.98

My Take:
To start, I have one issue with this stock and company in general: they make consumer loans so earnings could slide drastically if the economy takes a big hit later in the year. However, a sustained bull rally should benefit the stock allowing it to continue its uptrend, especially since it has a large institutional following. If institutions bail, this stock can fall quickly and will hurt investors along the way. For that reason, I am raising the risk factor for accumulating shares at this point in time.

The company owns and operates pawnshops in the U.S. and provides pawn loans, and short-term cash advances, and check cashing and other specialty financial services to individuals. These services will be needed whether we are in an up or down economic cycle but the company runs the risk of defaulting loans if the economy tanks and unemployment rises; leading to loans that can’t be repaid.

Recent chart action shows support at both the 50-d and 200-d moving averages with volume increasing above average levels. The stock must cross back above $44.50 in order to establish a recent new high above the last peak. If it fails, cut the stock and move on as the rally could be done.

Looking at the weekly chart, the stock must rise above the dotted down-trend line I have placed on the chart. It is very important for the stock to rise above this line in order to continue the long term up-trend. Gauge the volume to understand if institutions are driving the price higher or dropping shares.

Potential Trade Set-up:
Ideal Entry: $41 to $42 (we will use $42)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 5% or $39.90
Number of Shares: 475
Position Size is $20,000
Risk is $2.10
Target is $46-$49
Risk-to-Reward at $46 is 2-to-1
Risk-to-Reward at $49 is 3-to-1+

Strong Sister Stocks:
MasterCard Inc. (MA)
CBOT Holdings Inc. (BOT)
Alliance Data Sys Corp. (ADS)
Intercontinentalexchange (ICE)
Total System Services (TSS)

Institutional Analysis:
Held by Institutions: 89.13%
Money Market: 193
Mutual Fund: 293
Other: 13

Shares Held: 38.96 mil
Shares Held Previous Period: 37.74 mil

Shares Bought: 5.81mil
Shares Sold: 4.58 mil
Value of Shares Bought: $257.6 mil
Value of Shares Sold: $203.4 mil

Top Institutional Holders, Shares Held:
Barclays Global Investors Uk Holdings Ltd, 1,446,959
Granahan Investment Management Inc., 1,232,076
Eagle Asset Management, Inc., 1,157,322
Legg Mason Inc., 1,117,802
Vanguard Explorer Fund, Inc., 1,110,800

Key Fundamental Numbers:
Market Cap.: $1.3B
Outstanding Shares: 29.74M
Net Income: $64.79
Free Cash Flow: $87.14M
ROA (%): 8.90%
ROE (%): 14.72%
P/E (TTM): 20.17
P/E (Forward): 16.67
PEG Ratio: 1.11
Price to Sales Ratio: 1.65
Book Value per Share: 14.88
Price to Book Ratio: 2.72

3-Year Earnings per Share Rate: 31%
3-Year Sales Rate: 22%

Earnings:
Yearly (2008): 3.00E
Yearly (2007): 2.50E
Yearly (2005): 2.00
Yearly (2005): 1.48
Yearly (2004): 1.18
Yearly (2003): 1.13
Yearly (2002): 0.75

Revenue (millions):
Yearly (2006): 693.2
Yearly (2005): 594.3
Yearly (2004): 469.5
Yearly (2003): 437.7
Yearly (2002): 387.8