There’s a small segment of the retail space that’s suddenly doing very well, according to Utendahl Capital Partners analyst Daniel O’Sullivan. It’s the pawnshop business. He has several recommendations for investors.

“Given the current tough economic times for the consumer, people are looking for reasonably-priced merchandise — TVs, computers, electronics — so that’s really driven growth for them,” O’Sullivan told CNBC. “Plus, we saw a benefit this quarter, too, with the economic stimulus checks helping out the pawn companies.”

He also notes that much of the inventory in pawnshops is in jewelry, which has gained greatly in value from soaring gold prices.

Recommendations:

His favorite pawnshop company is EZCorp

EZCORP INC EZPW 17.40 -0.62 -3.44% NASDAQ

“They are in the process of closing on an acquisition of privately held Value Pawn,” he said, “I think that’s going to add about $125 million in revenue next year…the company’s done a wonderful job of moving into the Mexican pawn market.”

Other companies in the space on his list are Cash America

CASH AMERICA INTL INC CSH 40.87 -2.01 -4.69% NYSE

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and First Cash Financial Services

FIRST CASH FINCL SVS FCFS 19.25 -0.08 -0.41% NASDAQ

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