A Short Squeeze Could Trigger in EZCORP Stock as It Trades at New 10-Year Highs

EZCORP (EZPW) has surged nearly 110% over the past year and is trading at new 10-year highs. The stock maintains a 100% “Buy” technical opinion from Barchart. A high short interest of 16.93% could fuel a potential short squeeze. Despite some views of overvaluation, expansion in target markets and persistent demand for pawn loans underpin the bullish thesis.

Today’s Featured Stock

Valued at $1.99 billion, EZCORP (EZPW) is a provider of pawn loans in the U.S. and Latin America. The company offers pawn loans, which are non-recourse loans collateralized by tangible personal property, and sells merchandise to customers looking for good value. 

EZCORP earns pawn service charges for those cash advances, and the rate varies by state and transaction size. The merchandise it sells consists of second-hand collateral forfeited from its pawn lending activities or purchased from customers.

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What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. EZPW checks those boxes. The Trend Seeker issued a new “Buy” signal on April 2. Since then, the stock has gained 20.15%.

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Barchart Technical Indicators for EZCORP

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

EZCORP scored a 10-year high of $33.14 on April 30.

EZCORP has a Weighted Alpha of +133.9. EZPW has a 100% “Buy” opinion from Barchart. The stock has gained 107.47% over the past 52 weeks. EZCORP has its Trend Seeker “Buy” signal intact. The stock recently traded at $32.53 with a 50-day moving average of $27.66. EZPW has made 15 new highs and gained 24.94% over the past month. Relative Strength Index (RSI) is at 77.38. There’s a technical support level around $32.23.

Don’t Forget the Fundamentals

$1.99 billion market capitalization. 20.69x trailing price-earnings ratio. Analysts project revenue to grow 24.70% this year and another 11.21% next year. Earnings are estimated to increase 24.37% this year and an additional 10.41% next year.

Analyst and Investor Sentiment on EZCORP

The Wall Street analysts followed by Barchart give the stock 5 “Strong Buy” and 3 “Hold” opinions with price targets between $26 and $40. Value Line ranks the stock “Above Average.” CFRA’s MarketScope rates the stock a “Buy.” Morningstar thinks the stock is 9% overvalued with a fair value of $29.54. 15,440 investors are following the stock on Seeking Alpha, which rates it a “Strong Buy.” Short interest is a high 16.93% of the float with 12.57 days to cover the float.

The Bottom Line on EZCORP

We will always need short-term shop loans, and the company is expanding in the right target markets. Please notice the high short interest of 16.93% of the float. Some smart money is betting against the stock, but if the share price keeps rising, there may be a short squeeze coming. Place your bets!

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.

On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

 

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