Sunday, December 21, 2014

" You always hear from analyst about Mastercard,Visa, and American Express as popular stocks to buy. But for my money here, the best value is Discover Financial Services (Symbol DFS)."

Dow Jones Industrial Average 17,280.83 (Way Down!) Week Ending 12-12-2014
Dow Jones Industrial Average 17,805 (Way UP!) Week Ending 12-19-2014

I can only hope that we have put in some type of bottom for a while with this drop in oil price. It will allow us some kind of baseline data to calculate how companies will do in 2015.

One company I like here with consumers having that oil savings in their pocket is Discover Financial Services (Symbol DFS, $65.09). (The price a week ago when I started writing this article was $61.81. Busy Christmas chores have delayed me.)

Discover meets my baseline investment criteria having a PEG Ratio of 1.22 and a Return on Equity of 24.09. Pretax ROE is 36%.

Annual revenue for this lesser noticed credit card company is $8.568 Billion dollars. Nothing to sneeze at. Revenue growth has been 6.1% annually.The company offers a annual dividend yield of 1.55%

The company gives off Quarterly Free Cash Flow of $1.026 Billion dollars.

On the Earnings side, the company currently has a low PE of 11.8. The 3-5 year earnings growth has been 35.6%. Earnings per share for 2013 was $4.96 per share. 2014 is projected at $5.25 per share and for 2015 it is projected at $5.53 per share.

The two year stock chart on this stock shows a nice steady and stable rise. The Year to date stock return is 12.24. The One year total return on the stock is 14.41%. the 3 Year return on the stock is 166.8%. So a good long term investment prospect for my taste. I think this would be a good investment for the "Financials" section of your diversified investment or retirement account. Don't try to be a hero in 2015. We have had 3 double digit gain years in a row, so this year you should look to stocks that have given steady returns. I would buy this one on a dip here.

Happy Holidays and eat and be well!

Merry Christmas - Freewilly   

(next week we will review the Freewilly 14 for 2014 picks to see how I did).

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