- The U.S. consumer will be more resilient than feared, says the bank, so credit card stocks - down 8% YTD vs. a flat S&P 500, and now trading at about a 9x P/E level - make a compelling risk/reward play.
- Top picks: Discover (NYSE:DFS) and Synchrony Financial (NYSE:SYF). For DFS, investors are underestimating the company's ability to accelerate growth. For SYF, investors are too focused on credit concerns and weak U.S. retail sales. SYF, says Deutsche, has several advantages vs. peers in those areas.
- Already a Buy at Deutsche, Ally Financial (NYSE:ALLY) is due for a bounce, with concern over the TradeKing purchase overblown.
- American Express (NYSE:AXP) is still a Buy as the earnings growth outlook is so low now that the company can begin to beat estimates.
- Capital One (NYSE:COF) and Santander Consumer (NYSE:SC) are Holds.
- Now read: Synchrony Is Poised For Price Appreciation (March 16)
Deutsche: Credit card issuers are mispriced
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