I am retired and take educated guesses on all things financial.

August 08, 2007

August 8, 2007: Credit? Where do other facets stand and some recommendations

With all of the sub-prime panic rants amongst the media and others, I thought it would be interesting to look at where a few other finance-oriented groups stand. Here are my findings:

Credit Cards: Credit card profits decreased in June and July as a result of lower yields and higher losses. Second quarter returns were a bit lower than expected by analysts, but bankruptcies and other losses began to normalize.Third quarter trends are expected to decline modestly as credit losses continue to trend higher.

Credit Quality: Bankruptcy filings for the week ended July 27th were up 31% from a year ago. The four week moving average is up 35% from last year and year to date filings are up 51%. 2008 looks better, according to company reports. Many analysts have revised their bankruptcy numbers downward for the year.

Auto Finance: Sub-prime losses decreased while mid prime losses increased. Used car prices are up slightly. Profitability remains suspect due to higher costs and increased stips to meet loan requirements. Many view this as a good thing longer term.

Stocks to consider for purchase:

Capital One Finance (COF)
CapitalSource Inc. (CSE)
Citigroup (C)
CompuCredit Corp. (CCRT)
JPMorgan (JPM)
Morgan Stanley (MS)
Neinet Inc. (NNI)

I know that several of the above stocks have been rocked by the sub-prime rants. This may be a great time to snap a few up for your portfolio.

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