Barron’s: great upside for Discovery (DFS)
By Daniel at 8 July, 2009, 9:05 pm
http://online.barrons.com/article/SB124691865516702463.html?ru=yahoo
1: “…investors who can stomach some risk should consider charging ahead to buy the stock at current levels.”
2: “Moreover, Discover likely won’t be as hard hit as other lenders under legislation passed by Congress in May that curtails interest-rate hikes and other punitive measures card issuers have classically used on high credit risks.”
3: “…shares are trading well below conservative estimates for book value of $12.”
4: “…the company reaffirmed a prior forecast for managed charge-offs of 8.5% to 9% for the fiscal third-quarter ending in August… below the 9.4% that Capital One, for example, is forecasting by the end of September. Discover’s charge-off rate was only 7.8% in the May quarter, well below Capital One’s 8.4%.”
5: “Discover could be gobbled up by one of the other financials. It possesses its own internal transaction processing system, rather than relying on MasterCard or Visa.”
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