Discover Financial Services (DFS): Industry & Business Stock

Drivers Earning Drivers

Paper to electronic payments Growths in credit spending Expansion in personal and student

loans

Business 1. 15 billion market cap company

purely focused on direct banking & payment service

2. Leveraging discover card brand in attracting more quality customers

3. Attractive customer base Average Age: 44; Average Household

Income: $108,000

75% are married, have attended college OR have a house

4. 10% limited direct exposure to Europe

3Q 2009 to 3Q 2011

Valuation & Technical

Low Valuation Trailing P/B of 1.74x; Trailing

ROE of 29.9%; PEG of 0.71 American Express: P/B of

3.05x and ROE of 27.48%

Attractive Technical Just broke out of a price

consolidation phase

Outperformed AMEX Financial, MasterCard, VISA and S&P 500 Index over the past three years

Initial target price of around $35: upside of 30%