Investment opportunities in Consumer Finance
The changing landscape at the consumer level is having a strong impact on individuals – on how, where and when they spend. This ever increasing level of digitalization at the consumer level bodes well for consumer finance companies.
As consumers become less and less adverse to the use of IT, consumer finance companies experience will be relatively trouble-free when introducing any kind of digitalization process to their customers. The challenge for these providers, however, is to implement a cost-efficient way of learning about their potential prospects, which is critical if they want to stay in business.
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Credit Saison | 8253 | Japan | 3 % | 2.74 |
| Investment case: Credit Saison Co., Ltd., is engaged in the credit service business in Japan. This includes credit card shopping services and cash advances as well as finance services, real estate liquidation and loan guarantee services. Given Japan’s level of demand for high technology related items, fully digitalized processes in many areas are to be expected, which in turn would improve the company’s efficiency. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Provident | PFS | USA | 18 % | 5.5 |
| Investment case:Provident Financial Services, Inc. provides banking services to individual and business customers through branch offices in the greater New York and New Jersey areas. Given it is a rather small company, it should focus on efficiencies (external and internal) instead of focusing on acquiring new customers in the traditional manner. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Capital One | COF | USA | 19 % | 7.03 |
| Investment case: Capital One Financial Corporation is a financial services company providing a variety of financial products and services. A fully digitalized process would increase CTR flow on its online platform. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Cembra | CMBN | Switzerland | 16 % | 5.45 |
| Investment case: Cembra Money Bank AG is a new entry to the Swiss equity market. The company is strong balance sheets, and first quarter results were above expectations. It offers credit card loans, private student loans, personal loans, home equity loans and deposit products. The company runs a digitalized process, service which is supported by the physical presence (25 locations across Switzerland). | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Discover | DFS | USA | 21 % | 6.23 |
| Investment case:Discover Financial Services, Inc. is a direct banking and payment services company. It offers credit card loans, private student loans, personal loans, home equity loans and deposit products. A fully digitalized process would increase CTR flow on its online platform. | ||||