Smart Stocks Investing

PRAA)” hspace=”6″ vspace=”6″ width=”200″ height=”50″ />Investors in Portfolio Recovery Assoc. (PRAA) have to be pretty pleased with the way 2010 has treated them. The stock is up nearly 20% so far this year despite the fact that the market has been sluggish. At issue has been both a positive earnings announcement for the fourth quarter, and a successful stock offering last week. The stock offering allowed the company to raise capital to pay down its debt level and gives the company more flexibility for future strategic purchases.

Portfolio Recovery operates in an industry that doesn’t have too many friends. The company purchases receivables from financial institutions and other corporations and then attempts to collect enough of these receivables to cover its purchase price and generate a profit. That’s a nice way of saying the company is a glorified debt collector. This business has been profitable for quite some time, but in the last decade many market participants have faced competitive challenges.