Discover Returns 44.5% To Elite Inside Trader Pro Members!March 23 | Posted by Kevin Monaghan | Top Story
Discover Financial Services celebrates its one year anniversary as an Elite Inside Trader Value Stock Pick which we added to the portfolio last year at $15.39. We continue to hold shares of Discover Financial Services (DFS) and the shares have returned a staggering 44.57% to its investors, compared to 10.90% for the S&P 500. As we announced on Monday, we picked up even more shares going into earnings. Credit Card companies are now experiencing “decoupling” from the unemployment rate as people continue to pay off debt and get their personal finances in order. One trend that is helping the credit card industry through this recession is that consumers are now more inclined to pay off their credit card debt than they are to continue to pay a mortgage that they are underwater on. Good for credit cards, bad for housing.
Discover’s net income for the first quarter was $459 million or $0.84 per share, that is compared to a loss of $122 million or $0.22 per share in the prior year. Analysts were expecting $0.60 per share. “Our results this quarter represented record earnings for any first quarter in Discover’s history” said CEO, David Nelms, in a statement. They also raised the dividend to $0.06 per share, up from $0.02, which returns the dividend to the pre-credit crisis level.
Shares are trading at $22.75 in after hours, up over 2.25% from Tuesday’s closing price. We continue to see value in the credit card industry and see American Express (AXP) and Capital One (COF) as potential opportunities.
Our Elite Inside Trader Pro subscribers have seen 6 out of our last 7 stock picks beat the S&P500. Our average Value Stocks Portfolio over the last 7 months has returned 18.16%, outperforming the S&P500 index by 94.2%.
Disclosure: Author, Kevin D. Monaghan, Senior Partner at Elite Investment Group, is long DFS.