The Time for American Express May be Now
By:NewsyStocks   Wednesday, December 07, 2021 1:03 PM



If, as many investors, analysts and those on The Street are correct, much of the financial sector has been oversold. That's great news for investors looking for bargains in a volatile market. But that's only part of the reason American Express (Ticker: AXP) looks ripe for investing.

There are a lot of compelling arguments to support the view that financial stocks offer good value, AXP among them. By all accounts, the Holiday shopping season has started out with a bang. Whether online stores or brick and mortar, consumers are not being shy about spending. This bodes well for a number of companies, including American Express. A byproduct of consumer spending is that it is often done using credit cards; particularly this time of year.

By now much of the U.S. is aware of the limitations imposed on how much banks can charge for the use of debit cards. In an effort to replace billions of dollars in lost revenue, many banks are providing customers incentives to use credit cards; another arrow in the AXP quiver.

As a result, all the big players including Discover (Ticker: DFS), Visa (Ticker: V) and Mastercard (Ticker: MA) have enjoyed a decent run-up recently. Some more than others of course, but they've all been positive, including AXP.

What makes AXP even more intriguing is it offers something a lot of the other card companies don't; greater diversification of business lines. Strong financial services component, travel services and prepaid products are additional factors working in American Express' favor.

Of particular interest is AXP's financial services lines. As the Euro Zone crisis begins to shake itself out, including recent announcements promising multiple bailout packages, oversold financial services firms will benefit. One look at the last week's movement in bank stocks is confirmation of that. As if additional positive indicators were needed, at 12.17 American Express boasts one of the lower P/E ratios in the industry as well. Toss in a 1.5% dividend the $56 billion is sure to continue and there are simply too many positives to ignore. If timing is everything, then American Express is poised for a nice end of the year run, and a strong New Year.


 

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