American Express (AXP)

Stock is overvalued right now. It is trading at excessive values now. Starting to see some credit concerns creep in. Be prepared for some volatility.

It has 13x forward earnings with a 12% growth rate as global consumer spending rises. Digital currency is overtaking cash and cheques as a strong trend. Worldwide, people still use cash over plastic, but this will change--and AmEx will benefit. Last week, they announced a co-branded card with Amazon and $3.4-billion buyback program. He's held this for a long time. (Analysts' price target: $109.27)

Should I buy American Express (AXP-N) or VISA (V-N)? It is like asking if I should buy an ice-cream for my daughter or my son. Ownes both. Basically, toll booth for global spending. There is still more cash out there than plastic out there believe it or not. American Express (AXP-N) seems a little cheaper from a valuation stand point. Amex is a little more value oriented, VISA is a little more growth oriented. Keep both.

(A Top Pick Aug 26/16. Up 44%.) Still likes this. It just hit new highs yesterday. Trading at about 15X forward earnings with a 10% growth rate, giving it a 1.5X PEG ratio. 1.5% dividend yield will grow at about 10% a year. They are aiming to lower their profits and rates to entice more merchants to accept its cards, by 2019. Thinks it will continue to do very well, particularly with interest rates moving higher and a possible tax reform.

MasterCard (MA-N), Visa (V-N) or American Express (AXP-N)? Of the 3, he prefers Visa, the largest of the 3. This one is not a favourable one in his view.

They lost Costco, which one of their biggest accounts. Once they focus back on their premium products we can see growth. The stock is beaten up after a difficult 2016. She thinks this will be a turn-around story.

This continues to focus on the lending side of its business, and they are doing a lot of cost cutting initiatives which is going to help shares move higher. Technically, it recently broke its 200 day moving average on the upside, which is very bullish. It has formed a solid recovery from its lows earlier this year. Fundamentally it is reasonably valued, trading at about 12X forward earnings, with an estimated growth rate of 8%-10% in terms of earnings per share. Over the last 5 years, it has delivered an annual dividend growth rate of over 10%, and going forward he expects it to be 8%-9%. Dividend yield of 1.79%.

Got Stopped out of this about a year ago. Felt that the brand was getting a little bit tarnished when Costco (COST-Q) walked away. He would prefer Visa (V-N) instead. They are reporting shortly and he would wait to see how they have done.

A very good company, but he prefers Visa (V-N), because it has the largest electronic payment system in the world. This will give you some dividend growth, but it won’t be very high.

Financial services segment is quite weak right now. Technically this one has a major uphill climb right now. There is a very consistent negative revision cycle for earnings. Prefers Visa (V-N) or MasterCard (MA-N).

It has a bit of an uphill battle to get back to double digit EPS growth. Visa is at 15%. A lot of competition has come through. He prefers other credit card names.

He fundamentally believes in the company. They have a closed loop network. A great company and well-run. Right now this is not the best stock. Earnings revisions have been down. They lost the Costco exclusive. Right now he would prefer a Visa (V-N) or MasterCard (MA-N). (See Top Picks.)

The natural reaction in a discussion in this company is that if interest rates rise, are they going to suffer greater credit losses which will inhibit earnings. Probably not because the profile of the average American Express card holder is very positive and tends to be wealthier individuals. He prefers the Visa (V-N), MasterCard (MC-N) group over this company’s model. This one takes on credit risks, while the other 2 are just transaction companies. (See Top Picks.)

Would be more inclined to play Visa (V-N) in this area, as it is showing better International growth. They are all facing the same headwinds of more competition from online payments. Visa has done a better job even though it is a little bit more expensive. You are better off owning the better grower.

Underperformed relative to peer group. AMEX carries a receivable risk whereas Visa and MasterCard do not. He prefers V-N, but has no trouble buying any of them.