Sunday, June 14, 2015

I threw in the towel on DFS, Discover Financial Services, one of my 15 for 2015 picks. It trades to much like a bank. I moved that money into American Express Company , (AXP) which is more popular with institutional investors, and is currently trading at a discount because of the loss of the Costco account.

Dow Jones Industrial Average 17,899 (Down) Week ending 06-12-2015

Discover Financial Services still has great numbers, but the stock is unloved by wall street. The Momentum guys trade up on Visa and Mastercard which are are near all time highs. I decided to go with another value credit card company trading at a similar PE to DFS and that at least I can be pretty sure will be more popular with institutional investors which include Warren Buffett.
You cannot chase these other momentum credit card names here. Do not fall into the trap.

American Express Company ( Symbol, AXP, $79.53) with a PE of 13.95 seems to be a better way to go here. Bernstein likes it with a target price of $94 or $95 per share. 

American Express has a PEG Ratio of 1.62 and has a Return on Equity of 28.60 so fits my investment criteria.  The operate at a Gross Margin of 73.3% and pay a dividend currently at 1.46%.

EPS for next year is looking like a healthy $5.72 per share.  The company employees 54,000 employees worldwide.

"American Express, don't leave home without it"  I think it is a safe bet for a nice 1 to 3 year return on your investment.

Enjoy the nice weather and head to the garden or the beach,


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