Discover Financial Services (NYSE:DFS)

I think capital one and discover are the best in the financial sector. I work for one of the top banks in the industry but still consider the way Capitalone and Discover do their business is the best way to go about in current financial world.

I like COF and DFS, but I don't want to own any until mid march.

They have a low P/E Ratio so you can get the stock very cheaply, they pay a nice dividend that you can (and should) re-invest somewhere, they are above their Simple Moving Average 50 and 200 day lines, and they have a very positive MACD.

Boy. I just gotta feeling about this one. I've said this many times but I think I'm going to invest real money in this one.

With a P/E of 6 and forward P/E of 8, unless I'm mistaken, the market is predicting no growth for this company. This may be true. After I do my research, if I do smell any growth at all, I'm plopping down my cash until the P/E goes above 10.

sufficient opportunity to grow along with the competitors such as visa, ma, and american express

Makes plenty of money.

screens: +5% A18B/B+ lg/con

DFS has expanded from offering credit cards and a payment service to Student Loans (acquisition of SLC last December), Personal Loans, Banking Products such as CDs, MMs, and Savings accounts. The recent acquisition of Lending Tree further expands the offering. The growth of the deposit side greatly reduced the cost of funds for the credit card business. Given the experise demonstrated in Risk Management on the card side, it stands to reason that the company will use the same cautious (and profitable) approachs with other loan products.

PE of 10.97 is well below the companies average PE of 13.10. They just raised their dividend to .24 where it was pre-recession. With a 20% increase in transaction volume and the increase in their student loans their earnings should continue to grow to record highs this year and continue to steadily grow through the next few years.

Money in the bank

DFS has been on an upward trend since I began to invest/watch it at about $18. At that time, I calculated that it should be valued at $30 and a few months later it is coming to fruition.

Vicious advertising will continue to pay off for this company versus it's peers.

Scott breakout

potential takeover? maybe by a telecom to get into cardless payment systems...

Look at how much they have in Cash....they can hand out more loans then any other because they didnt take on debt in this financial crisis. They saw this coming and you should see their growth in the coming years while all others pay off debt

I am going to do a Cross Sectional Analysis on five of the largest credit card companies, analyze the risk involved with the industry and determine on a relative basis which stock is undervalued. The companies I am evaluating are Discover Financial, American Express, Visa, Capital One and MasterCard…

Read the report at
http://stocklook.blogspot.com/

Or after Wednesday, October 28
http://stocklook.blogspot.com/2009/10/credit-card-stocks-dfs-axp-v-cof-and-ma.html

Oh, by the way, earnings are coming up this next week and i have some bad news.

I recently ran into this article on an Ultra oil ETF strategy:

http://www.howtowriteoptions.com/ultra-covered-call-strategy-fails

By shorting each side of the Long/Short ETFs I will eventually come up on the positive end. Not sure how effective this will be in real life but long term on CAPs combo-ing these ETF is a sure winner.

Why does everybody hate Discover?!

Its run 200% from the lows. I dont have the card but its interest rates suck, and they moved their payment schedule back about 4 days on customers while raising late payment fees while saying default rate is around 5%. In this economy you dont want to piss off your customer whom your holding undsecured debt for. This is just asking for non payment, lost customers and a bad reputation that will hurt future business. Moving a payment schedule like this tells me they are desparate to make the numbers! Very desparate.