The Decline of American Express

My take is that American Express is not a good long term investment because its business is not sustainable. There is simply no way that it will be able to keep paying out 32¢ dividends.

American Express is overpriced and headed for a serious fall. Stay away from Amex shares unless you are looking for something to short.

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Costco Defies the Odds

Costco has one thing in common with Amazon, it is a very cash rich company. On February 28, 2017 it reported $4.976 billion in cash from operations, $2.384 billion in in net income and $5.965 billion in cash and short-term investments. This was in spite of a free cash flow of -$23 million and a profit margin of 1.73%.

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Should we be Worried about American Express

American Express also some very bright prospects for the future. One is the growing use of payment apps such as Apple Pay and Android Pay; which Amex supports. That might grow the value of credit card payments and profits from them.

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Costco is not Helping Citigroup

Despite the Costco debacle, Citigroup is still making money, because its’ income is increasing.

Citi reported $14.67 billion in net income on September 30, 2016; which was a slight increase over 2015. The bank reported a net income of $14.25 billion in September 2015. Unfortunately the net income has fallen since the Costco deal – it was $15.31 billion in June 2016.

This makes Citi something of a value investment because it can afford to lose a lot of money. Citigroup will survive the Costco troubles, because it can take the hit.

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Credit Cards’ Bright Future on Display at Discover Financial Services

These numbers; and the 27.77% profit margin reported on September, show that Discover’s decision to concentrate on providing basic credit card services and good customer service is paying off.

By ignoring flashy gimmicks and avowing entanglements with retailers; such as American Express (NYSE: AXP) messy relationship with Costco, Discover has been able to maintain steady market share. It has also accumulated a lot of street cred and good will along the way.

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Is Wells Fargo Now a Value Investment?

Cynics might wonder if Uncle Warren knew; or at least suspected, what was going on at Wells Fargo when he bought all that stock in the company. He realized the mess would hit the fan at some point and force changes that would make his investment more valuable.

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The Incredibly Shrinking American Express

Although its business is shrinking, the third quarter earnings report indicates that American Express is still a cash rich company

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Is Western Union Doomed or an Income Value?

Western Union is making a lot of money and generating a lot of float for its size. It’s also easy to see why its stock value is going up. Ycharts reported that investors were rewarded with a dividend yield of 3.13% and a return on equity of 63.2% on September 16, 2016.

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Capital One: The Value in Banks and Credit Cards

Capital One is a value investment because it makes a lot of money and carries a lot of float like a bank. Yet it is also experiencing a lot of growth, which makes a really good long-term buy and hold play.

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