3. Conn's

Year-to-date Total Return (as of Dec. 12): 145.99%

Price-to-earnings ratio: 31.74

Market Cap: $2.71 billion

Conn's (CONN) just busted out a solid quarter on Tuesday, showing that there's opportunity in its target customer base of underbanked consumers.

The Beaumont, Texas-based chain, with roughly 70 stores, sells consumer electronics, mattresses and home appliances, but it also has a nearly $1 billion consumer credit portfolio as well.

Conn's reported record profit and revenue for its fiscal 2014 third quarter. The company said last week third-quarter earnings of 66 cents a share were up 88% from the year-earlier period. Revenue rose by half to $310.9 million, with its retail gross margin expanding 460 basis points to 40.1%. Conn's upped its full-year earnings guidance to $2.75 to $2.80 a share.

"We achieved the highest quarterly revenue and net income in Conn's history," Theodore M. Wright, Conn's Chairman and CEO, said in the earnings statement. "This sales trend continued into November with retail sales expanding 49%. November same-store sales rose 32%."

Piper Jaffray analyst Peter Keith reiterated his "overweight" rating and $84 price target on Conn's following its earnings report.

"CONN continues to be one of the better long-term growth stories within our coverage," Keith wrote in a note.

Specifically, the company's retail/credit hybrid business model "allows for significant differentiation and a defensive moat," Keith said.

Conn's also has "a multitude of comp/sales drivers including enhanced marketing, relocations/remodels, new store maturity, continued expansion of furniture and mattresses," as well as opportunity to expand the store base to roughly 300 stores due to its underserved customer base, the note says.

Additionally, "with delinquency trends now running counter to normal seasonal patterns, CONN appears on track to work through the Q2 collections issue by early next year," the note stated.

"All in, we believe CONN is positioned to grow EPS" more than 30% for the next three years, Keith wrote.

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