0.517

At credit-card issuer Discover Financial Services (DFS), the CEO, CFO and chief operating officer bought shares in early October at an average of $11.55 a share; the stock now trades around $10.

Discover is poised to grab market share in the U.S. and abroad, reaping big economies of scale. And in a takeover, the company might go for 30% or more than today's stock prices.

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Goldman Sachs said it is upgrading Discover Financial (DFS) to Neutral from Sell following announcement of Diners Club acquisition. See increased high-multiple network earnings and expansion into markets outside U.S. with better outlook for consumer spending. Target raised to $17 from $14.

Another pick is credit-card issuer Discover Financial (DFS), which earned a reported 50 cents a share in its most recent quarter. Despite the current credit scare, the Morgan Stanley spin-off has reported improving creditworthiness among its customers. It also benefits from owning its payments-processing network and has the chance to increase market share because its merchant fees are lower than rivals'. Discover has a big share-buyback program under way, as well. The stock, which trades around 16, has the potential to reach 24, or 15 times expected 2009 earnings of $1.60 a share, according to the hedge-fund manager.

Discover Financial (DFS) was upgraded to Overweight, Morgan Stanley said. Company will likely be able to beat conservative 2008 expectations, aided by more conservative lending practices and interest rate cuts.