EZPW Beats Earnings

In my last post, I laid out a synopsis of the bull case for EZCorp. It didn't take long for my views to be validated - EZCorp posted Q4 earnings of 72 cents last night, beating expectations by two cents. International growth was strong (especially in Mexico) and is poised to be a driver of considerable earnings growth moving forward. They also guided for $3.05 to $3.10 in earnings for 2012, mildly above analysts' expectations of $3.00.

The stock is up 2.5% today outperforming the market by 6%. So far so good on this call.

Disclosure: I remain long EZPW

Bad Asset Allocation (BAA) I

I have been critical of the valuations attached to the .com 2.0 firms since Groupon turned down $6 billion from Google. I said it then, and I’ll say it again Groupon/Google will prove to be the next Yahoo/Microsoft.

 Let’s have a look at the biggest name to IPO before markets crashed in August.

This clearly isn’t pets.com (there are real earnings there) but I can’t countenance that P/E. They’re priced for better than perfection.

I’ve heard all of the bull cases:

• They’re going to grow exponentially forever! 
• Investors are willing to pay a premium for high-growth companies in low-growth environments!
• They are revolutionizing the head-hunting industry!
• Think of all the advertising dollars they can rake in!

Sorry, not interested. Not at that valuation. If you’re willing to consider though, I have a bridge to sell you.