Cash America International (CSH) IS IT Worth Putting Your Cash In Their Stock?

Cash America International is a large owner and operators of pawn shops located in the US, Mexico and the United Kingdom. As of the end of last year the company operated through 994 locations, when taking into account Cash America Pawn shops, SuperPawn and Mr. Payroll locations. Throughout the current economic situation more and more people have been turning to pawn shops in order to meet their short term cash needs, this is a trend which many investors have been following for the past several months, with most investors unsure of the best way to buy into the specialty niche market. Cash America International may just be the avenue into the market which many investors may take advantage of. The pawn business at Cash America is currently booming. On Thursday (4/9) the company issued revised guidance for the first quarter of 2009, in saying that they anticipate Q1 2009 earning to come in between $.76 and $.78 per share, while the street and most analysts were expecting earning to come in between $.61 and $.65 per share. In their press releases the company sites an increase in pawn business activities as well as having lower loan losses than anticipated throughout the quarter.

From a technical investment stand point Cash America's stock is showing some strength. The recent trend lines show a very clear reversal at the beginning of March 2009, from its previous longer term downward trend which started in late July 2008. CSH has also over the previous two weeks broken above four of my various time length moving averages. Current CSH has broken above my short term averages being 10 and 21 days, my intermediate term average of 50 days and on Thursday last week the stock broke above my longer term moving average of 100 days. The News count indicator is showing that there was a bit of buzz about the stock during the previous trading day, most of which was related to the earnings estimates revision.  Volume was substantially higher than the previous 50 days moving average coming in at more than double the average. The RSI indicator for the stock shows that it has gone from an oversold position, which corresponds closely to the date of the trend change in early March, to a higher almost over bought level currently. Lastly the Twiggs Money Flow indicator has been showing more and more strength over the course of the last three weeks. Over all the technical signals on the stock look very favorable to investment.

From a fundamental point of view Cash America looks strong. Cash America's current assets to current liabilities ratio as of the end of 2009 was over 3 times; while their total assets to total debt ratio is currently running just under 2. Over the past four years this ratio has really been relatively unchanged, which goes to show that the company is very conscience of their usage of debt in expanding their operations. Maybe that has something to do with the business being run on others using debt in order to make short term cash obligations, maybe not. Income for the company has been strong and growing each of the past four years, with the 12 months ending December 2009 having a 12 months' income of just over $1 billion. Some of the fundamental ratios include ROA of over 9 percent, ROE greater than 15 percent, Price to book value 1.06 and a price to sales ratio of .59. Over all the fundamentals of the company look very strong. With the currently depressed stock price, I think that the upside potential is very high; I am looking for the stock to make it back into the high end of last year's trading range during this year, putting a target price between $40 and $45.