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Synchrony Financial: The Company's Bull Case Just Got Stronger

December 1, 2017

Summary Points

*A promising deal with PayPal was announced this week, and it makes SYF's bull case stronger.

*Credit quality has been a concern for SYF, but management has started getting out ahead of the issue.

*SYF is a long-term buy at today's price.

 

Synchrony Financial's ($SYF) stock has gained steam over the last few months, especially after Warren Buffett's Berkshire Hathaway ($BRK.A) ($BRK.B) disclosed a stake in this private-label credit card company, but the stock price is still well-below the high's of late 2016/early 2017.

 

Only recently has the company's management team proved that they have a good handle on Synchrony's credit portfolio and underwriting function but, as I described here, SYF shares have remained a buy throughout the price drop. I still view Synchrony as a great long-term investment even in the mid-$30 range and, in my opinion, the PayPal (PYPL) deal just made Synchrony's bull case that much better.

 

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