John Stephenson Discover Financial Services LLC DFS-N TOP PICK Apr 26, 2016

Discover Financial (DFS-N) or Visa (V-N)? Has recently come off quite a bit on the back of a missed earnings quarter. They also provided some forward negative guidance. He owns MasterCard (MA-N) which is very similar to Visa in terms of valuations. Visa has a much stronger earnings profile, and given the fact that the technicals are looking a bit rough on this one, he would wait until they turn around a bit and have an earnings surprise.

Have a credit card business as well as a consumer lending business, so they get great leverage through rising interest rates which he thinks will happen. Thinks costs are going to come down moving into next year. Stock is cheap at under 10X and they are returning a lot of capital to shareholders.

(A Top Pick Nov 18/14. Down 16.94%.) This is a theme that should have worked, but didn’t. They spent a lot trying to grow their loan book, and the challenge is that earnings growth is going to be a little muted.

It was a real darling for a while. They are more of a card company than a network. The whole sector is under pressure until you see a turn. The technicals are not confirming a positive fundamental story.

This is a card issuer. Numbers were quite favourable today and the space is acting very well. He prefers and owns Synchrony Financial (SYF-N).

(A Top Pick April 26/16. Up 5%.) He just got out of this recently. It has been falling along with all of the financials in the last 2 months. He still likes the name.

Payments and financial technology is a great group. He has preferred V-N for a long time with a more attractive business model. It has a great international growth path in front of it. Don’t buy the laggards.

Its merger with Capitol One will likely go ahead under Trump, since Washington will purse fewer anti-trusts cases. Shares soared today and will continue to climb.

The Capital One merger will work, and doesn't fear the Justice Department will block it.