With the economic downturn, rising unemployment, decline in house prices, and limited ability for consumers to continue using their homes as an ATM; credit card debt is poised to be the next disaster in the financial sector with bearish outlooks for credit lenders Capital One (COF), Discover (DFS), and American Express (AXP). Credit card processors such as Visa (V) and MasterCard (MA) have also declined with the overall market, but are leveraged to the volume of transactions with debit and credit cards rather than
Shares of this wide-moat gem are near five-year lows, thanks to consumer weakness and the market's cold feet regarding anything even remotely tied to financials or consumers. Amex won't rocket up the charts overnight, but for patient investors who are willing to go against the grain and grab shares right now, the long-run return prospects look almost absurdly favorable. If you currently have a position in American Express, you are right to own this stock -- it's a great business trading for a good price today. (And not coincidentally, Buffett is a longtime shareholder.)
AXP is very oversold. Market has overreacted to soft economy and its negative impact on AXP. Stock is moving up sharply off of 5-year lows with heavy volume. As the excess disposible income produced from the continued drop in oil prices begins to work its way through the economy, AXP will see a consequent recovery in earnings. Once stock passes minor resistance at 40, it should move quickly back to resistance around 50.
Over the last couple of weeks, American Express (AXP) has become a favored whipping boy of the financial shorts, who point to the company’s recent bad quarter and exposure to consumer credit as reasons the stock will continue to decline. While the idea that Amex will continue to face problems isn’t wrong on the face of it, what a lot of people are missing is the fact that Amex is still outperforming the other credit card companies - and it took a year for the problems facing the rest of the credit card industry to catch up with Amex.
This, along with several other reasons, is why I think Ame
The best time to buy is when we have a negativity bubble. This great nation of ours is in a deep pessimism. We have not seen consumer sentiment this low for decades (see following chart).
I’ve been saying the same thing for months.Ignore American Express (AXP) because of its exposure to consumer debt.But no one listened.AXP will be fine, they said.You’re blowing the consumer issue out of proportion. “Ian Cooper has no brain,” said one reader.
Things will be back on track for AXP within the next six months. This whole credit crisis won't be over yet but it will hit the rich much less (aka people who use AXP). This is a smart company which never seemed too bothered by the whole credit crunch compared to many others. A P/E for AXP of 11 is historically low or histarically low depending on your persective. Expect earnings of .84 per share for sept 08 with revenue of 7.9B. I expect growth numbers of 12-15% a year for the next 5 years. The low dividends are a good thing as their capitol goes into improving their company and not pleasi...
American Express is unlike Mastercard or Visa that only process credit card transactions for banks. AXP actually provides the credit and takes the credit risk onto its own books.
With the economy poised on the edge of a serious recession you can expect delinquent credit card payments and credit cards defaults and losses to begin to mount at American Express. This will place earnings under pressure for many quarters to come.
While the optimists are still forecasting a quick recovery for the American economy I have my doubts. With housing still in a downtrend th...
Over the next few weeks, I hope to do an individual valuation of each of the components of the Dow Jones Industrial Average. For a brief overview of the Dow, please see our Glance at the Dow - a snapshot of the valuations on March 10. When I have completed the individual valuations, I will [...]
5/21 - "...current legislation (could) potentially result in the renegotiation of fees that merchants pay issuing banks, known as the interchange fee. While Id be far out of line to assess the odds that the bill passes, its a worthwhile example to illustrate why American Express is the much better company and as well see later when looking at valuation investment."
"Visa and MasterCard...are very much a duopoly in the credit card market, with roughly 80% of the cards in force being one of those two brands. While there are lawsuits by merchants alleging antitrust violations, none hav...
1) Is the business simple and understandable? <o> </o>
American Express is essentially in the banking industry. The company focuses on helping traveler’s while they are away from their home banks. This involves credit card processing, traveler’s checks, etc. The business plan itself is fairly simple.
<o> </o> 2) Does the business have a consistent operating history? <o> </o>
Originally American Express was a shipping and delivering company. Long ago whe
These are notes from the Day 2 sessions at the 3rd Annual Value Investing Congress West, held May 6-7, written by Jonathan M. Heller.
Ken Shubin Stein, of Spencer Capital, laid out his philosophy, which includes:<!---->
Looking for asymmetric payoffs (limited downside, with much upside)
Bottom-up fundamental analysis
A scientific research process
Belief that volatility is the key to successful long term investing
Over the next few weeks, I hope to do an individual valuation of each of the components of the Dow Jones Industrial Average. For a brief overview of the Dow, please see our Glance at the Dow - a snapshot of the valuations on March 10. When I have completed the individual valuations, I will [...]
If you have not sold your CC on AXP it may be time to consider taking profits and moving on. Why you are asking? Simple, two gaps remain for AXP. 43 on the low and 65 on the high. Here current yield is only 1.43%. To low for my blood sugar. I am a simple investor with profits and looking for a better investment. Hell Money Market Funds pay better than 1.43%.
Axp has not been at these values for years and arguably is being driven down by its recorded subprime losses. However, it is in a class by itself in terms of valuation, brand and growth potential. Compared to Mastercard Amex is trading at a P/E almost 50% below M/C.
Buy now as it is begining to move up and you will not beable to buy into this at these levels.
Looking for the bottom?....Keep looking.
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Over the last couple of weeks, American Express (AXP) has become a favored whipping boy of the financial shorts, who point to the company’s recent bad quarter and exposure to consumer credit as reasons the stock will continue to decline. While the idea that Amex will continue to face problems isn’t wrong on the face of it, what a lot of people are missing is the fact that Amex is still outperforming the other credit card companies - and it took a year for the problems facing the rest of the credit card industry to catch up with Amex.
