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University of Pennsylvania

; J.D.,

Harvard Law School

. In 1991, Eisman joined

CIBC Oppenheimer

, where he covers financial services and specialty finance companies. Prior to that, he was a corporate lawyer with

Strook, Strook & Lavan


Industry Outlook and Style

Steven Eisman's outlook for the credit card industry is bullish, but only for the next six months. After that, he warns, these companies will face a more difficult environment. As the analyst explains, credit card companies see a slowdown in the growth of portfolios as people refinance their mortgages into cash and pay off their credit card debt. This, in turn, brings about an improvement in credit quality.

But as the refinancing boom ends, the reverse trend kicks in -- an acceleration in portfolio growth and a decline in credit quality. "We are in a great sweet spot right now, with the mortgage refinancing boom having ended nine months ago. So portfolio growth is definitely accelerating, but it's still too early for it to have any impact on credit card credit quality. But sometime next year you're going to see a deterioration. It may even begin by the end of this year."

Eisman describes these stocks as "priced for perfection," with

American Express



Capital One


both trading at 25 times next year's earnings.



trades at a multiple of 18. Because it's the cheapest, Providian is his favorite.

Home equity is the other major area of the consumer finance sector that Eisman covers. In this group, he likes

Household International


, which he says is the only major stock left in the group. Unlike credit cards, credit quality in the home equity industry is tied to housing prices, which are now stable.

Stock Pick

Favorite stock for next 12 months:



"Right now my top pick is Providian because it's got the best fundamentals, it's the fastest grower, and it's the cheapest due to legal issues the company faced earlier."

Rate Their Stock Picks:

Which stock do you like best?

Gordon: Freddie Mac

Eisman: Providian

Orenbuch: Capital One

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