- Discover has a track record of sustained strong financial performance which we believe is vastly underappreciated.
- The credit card business has a natural hedge against inflation as nominal consumer spending drives loan growth and card network volumes.
- Management has a long and impressive track record with the current CEO working as an executive officer in the company since 2004.
- We believe downside is limited at ~10-15% in a really bad tape, but feel good about a $4.2B buyback authorization (15% of market cap). We see the potential for upside of 15% to 20% in 12 months, and >40% in a few years.
For further details see:
Discover Financial Services: A Top Tier Compounder With A Natural Inflation Hedge