Regular readers of my pieces on BullBearings.co.uk will know that I turned bullish on the financial sector over a year ago and it's been so far so good.
Two companies that have done well for me are Mastercard (NYSE: MA) and Visa (NYSE: V) both are near all-time new highs with Mastercard up 27% and V up 34% so far in 2012 - but neither are quoted in London and so are not available on BullBearings.
One similar company which I have now bought is Dow member American Express (AXP) which is up around 18% so far this year but I think it has more to go. AmEx is well known for the ubiquitous credit and charge cards but also is has a very profitable consumer and business travel division and offers other financial services aimed at affluent and time starved consumers.
AmEx has a very powerful and affluent global database which gives it a great way to market products and services with partners, remember every time you use your card they know every hotel you book, flight you take and even that sneaky late night pizza you ordered, it’s all being tracked and analysed.
AmEx also publishes luxury lifestyle magazines; travel, cooking, wine, time management, and financial books and products; international editions of its titles; digital and mobile content; luxury-marketing events; and custom print and online programs for clients. AMEX cardholders spend around 3.5 times more than Mastercard and Visa card holders. Whilst maintaining traditional service values Amex is also embracing the new high tech world. There are currently over 97.5 million cards issued around the world.
New affluent consumers in emerging markets
The US and Europe may be slowing buy AmEx continues to attracted new affluent card members in China, Russia and Brazil signing many joint ventures such as the one with Bank of China.
At the current price of $57.40 shares stand on a P/E 13 which I don’t think is demanding for a company which has good growth prospects and steady income stream. The next earnings are due on 17 October 2012 after the market closes and I expect these to be solid. They currently pay 0.80 cents a year in dividend giving 1.37% yield and I can see this being increased.
It’s very easy to spread bet AmEx or you can buy stock via an online broker. After the recent run up the stock has been going sideways the last few months put I see a break out of this range and look for $63+ in the next few months. If you use a spread bet then I suggest the June 2013 contract which gives you plenty of time.
AmEx remains one of Warren Buffett’s long time favourites and his Berkshire Hathaway company owns 13% of the company, it is their fourth largest holding. His top three in order are Coca Cola (NYSE: KO), Wells Fargo (NYSE: WFC) and his fairly recent addition – and one of my top holdings – IBM. Other fund managers also like Amex and 83% of the company is owned by institutions.
Staying with the credit card theme Discover Financial Services (NYSE:DFS) not as well known in the UK but is a major player in credit cards, student and car loans. The stock has been in a very strong trend and not far off a new high. Capital One Financial (NYSE:COF) which has a UK presence offers cards and credit to lower credit score clients. It was hit badly in 2008 due to high credit defaults but has since made a very strong comeback.
Spread betting veteran Vince Stanzione has been trading for over 26 years and has produced a home-trading course at fintrader.net. He stresses that before you try trading it's worth getting some training
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Thu, 1st Jan - * Well-received results from a number of FTSE 100 heavyweights and a sharp drop in consumer-price inflation in the UK lifted London's benchmark index to fresh multiyear highs on Tuesday.