Long-term Trends Favor AmEx

Article Excerpt

AMERICAN EXPRESS CO. $52 (New York symbol AXP; Conservative Growth Portfolio, Finance sector; WSSF Rating: Average) is a major financial services company, with offices in over 130 countries. In September 2005, the company handed out all of its shares in subsidiary Ameriprise Financial Inc. (see page 73) to its own investors as a tax-deferred dividend. The spin-off let AmEx focus on its credit card business (90% of revenue), and its travel services operations (10% of revenue). The company is starting to realize some of the benefits of a recent Supreme Court ruling that that made American Express cards available through more banks. A new alliance with affinity credit card issuer MBNA (now a subsidiary of Bank of America) has also expanded the number of cards outstanding, and spending per card. Thanks to strong credit card revenues, earnings from continuing operations in the second quarter of 2006 grew 13.0%, to $0.78 a share (total $972 million) from $0.69 a share ($860 million) a year…

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