We believe that Discover Financial’s stock (NYSE: DFS) has a strong upside potential of 16% in the near term. DFS trades at $64 currently and it has lost 23% in value year-to-date. It traded at a pre-Covid high of $74 in February and is 14% below that level now. Also, DFS stock has gained 144% from the low of $26 seen in March 2020, after the multi-billion dollar stimulus package announced by the U.S. government has helped stock prices recover to some extent. That said, the stock is leading the broader markets by a wide margin (S&P 500 is up 50%), as investors are positive about the growth in consumer demand over the coming months, leading to higher transaction volumes and credit card loans. Despite a significant improvement in DFS stock since late March, we believe that the stock still has room to grow in the near future. Our conclusion is based on our detailed analysis of Discover Financial’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.

2020 Coronavirus Crisis

Timeline of 2020 Crisis So Far:

  • 12/12/2019: Coronavirus cases first reported in China
  • 1/31/2020: WHO declares a global health emergency.
  • 2/19/2020: Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
  • 3/23/2020: S&P 500 drops 34% from the peak level seen on Feb 19, as COVID-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March amid Saudi-led price war
  • Since 3/24/2020: S&P 500 recovers 50% from the lows seen on

Wall Street’s performance has been strong in the third quarter despite the recent market rout. Though the major U.S. stock indices logged in four consecutive weeks of losses, the S&P 500 and the Nasdaq Composite Index are on track for their best two-quarter winning streaks since 2009 and 2000, respectively.

Positive development surrounding COVID-19 vaccine and continued support from the Federal Reserve boosted the market. The encouraging data indicating that the U.S. economy is gradually returning to the pre-pandemic level also added to the strength. Additionally, renewed hopes for further stimulus coupled with bouts of upbeat economic data lifted investors’ sentiment. U.S. House of Representatives Speaker Nancy Pelosi indicated that the talks for the long stalled stimulus package of $2.2 trillion coronavirus relief bill have been continuing and it might come before November elections (read: Trump vs. Biden First Presidential Debate: ETFs in Focus).

However, volatility would continue to shake the U.S. stocks given the election uncertainty and resurging COVID-19 cases, which sparked concerns over global economic growth. The sharp sell-off in tech stocks on lofty valuation fears and lack of additional stimulus also took toll on the stocks in September.  

That said, we have highlighted five ETFs from different corners of the equity market that raked in more than 25% gains in the third quarter and could be better plays if the trend prevails.

Invesco Solar ETF TAN – Up 67.7%

The solar industry has been on fire buoyed by the presumptive Democratic presidential candidate Joe Biden’s push for clean energy and infrastructure plans. This fund offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index, holding 32 stocks in the basket. U.S. firms dominate half of the fund’s portfolio, followed by China (21.6%) and Germany (5.7%). The product has amassed $1.4 billion in