"One stock that is holding up well and is poised to do well during hard times is Portfolio Recovery Associates (NASDAQ: PRAA), which is America's most effcient debt recovery company," says Jim Powell in Global Changes & Opportunities Report.
"The company -- which has been on our buy list -- has become especially attractive for the economic conditions I expect to see over the next few months, and probably much longer.
"Portfolio Recovery -- which is America's most efficient debt recovery company -- buys packages of non-performing debts from major credit card companies, and typically pays only 2.6% of the total amount owed. With such a low initial cost, it doesn't take a large collection rate to turn a tidy proft.
"As more consumers default on the colossal debts they ran up during the housing boom, the company should see a great deal of new business.
"Although cashing in on credit card debt is the company's bread and butter, Portfolio Recovery is also finding success with other obligations. Among them are accounts from retailers, health care providers, utilities, government agencies, and auto dealers – to name only a few.
"The company is expanding to include overdue taxes, delinquent student loans, and other obligations. Portfolio Recovery is also growing by acquisition. In August, the company purchased the assets of Broussard Partners, a firm that specializes in providing audit services to local tax authorities.
"The transaction further expands the company's presence in the government revenue business. The purchase comes on the heels of a similar acquisition of MuniServices, another government supplier.
"Portfolio Recovery Associates is already doing well. Second quarter cash collections rose 32% to a record $85 million. Revenues jumped 16%.
"Earnings declined 6%, primarily due to the cost of acquisitions and the expansion of operations. Given the outlook for the economy, I think the expenses will lead to greater profits."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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