Chasing Value: Apple's Great, but This Stock Is Better!

Comparing this $1 billion dollar company to market darling Apple (AAPL), currently valued at $292 billion, you will find that EZCorp, which was on my stock pick list last year and this year as well, beats Apple backwards and forwards.

EZCorp was up Thursday, with the stock closing the day at $22.38, and then elevated another $0.49 in afterhours trading to $22.87. Looking at a comparison of Apple and EZCorp over the past ten years we find that EZCorp was the far better holding, even though Apple had a tremendous run.

More recent charts show Apple competing neck and neck and sometimes outperforming for a while, but just a while. More importantly, EZCorp, with stores in the United States, Canada, Mexico and Australia, has not yet reached 500 outlets. That means that this super stock has not even come close to its potential. That's what's amazing: it outperformed, perhaps the best stock story of the past ten years looking back and it is set to outperform by even a greater margin going forward.

I have heard investors and Wall Street pundits speculate that Apple could grow another 30% from current levels and become the largest stock by capitalization, passing ExxonMobil (XOM), at least for a while. Now consider that there is little to stop EZCorp from expanding to 5,000 stores here and abroad. That would be a 1,000% gain, or the potential to beat Apple's prospects by 33 to 1 -- now that is amazing!

Even the biggest Apple fan in the universe does not project Apple doubling in size in the foreseeable future. That is not true of EZCorp. There is little to stop it from growing from a $1 billion company to a $10 billion company. Depending on foreign growth, it could even top this.

Looking at the company metrics we find it selling at a PEG ratio of 0.68, meaning the company growth continues to exceed the growth of the stock price -- a bargain still. We also find a company with little debt giving shareholders 20% growth in ROE, ROA, and ROIC. Even though the company is doing so well, investors are buying a stock with a current P/E around 11 and a projected P/E of 10.

I could go further with all there is to like about this company but I think the case has been made. I have referred to EZCorp as the McDonalds (MCD) of pawn shops, partly because it also uses red and yellow as the dominant colors on its palette, and because it could also grow for decades. It is highly probable that you will find EZPW on my 2011 stock pick list, and there is only seven weeks to go.

UPDATE: EZPW closed today at $24.47, up $2.02 or 9.34% for the day.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value™ and Serious Money. Disclosure: He owns shares or options in EZPW and ISRG.