With shares of American Express (NYSE:AXP) trading around $61, is AXP an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for a Stock’s Movement
American Express is competing in a growing industry that, with recent technological improvements, has ample room for growth. Payment processing, credit cards, and digital money transfers are gaining popularity by the day. Entrepreneurs, businesses, and consumers are fully embracing the digital money transfer movement, and American Express is well positioned to take advantage of this. Look for this industry and American Express to continue to progress.
T = Technicals on the Stock Chart are Strong
American Express’s daily price chart is flirting with all-time highs. Currently, it’s actually about four dollars away from taking out these levels not seen since 2007. However, the stock is approaching significant multi-year resistance. This payment and credit card giant is one of the few companies that has completely retraced all of the losses seen during the financial crisis. Technical analysts like to see prices rising in a trend consisting of higher highs, higher lows, and consolidations in between. This is precisely what American Express shares have done over the last few years. Price wise, the stock has done exactly what a buyer would want to see.
Moving averages provide valuable insight not immediately seen when analyzing prices on their own. Essentially, an investor or trader would want to see different moving averages are behaving as they should. What are they supposed to do? The stock price should be above the key daily moving averages, the 50-day, 100-day, and 200-day, and they should all be stacked in consecutive order. A stock trading above the 20-day gives it the extra punch it needs to confirm a strong uptrend. What do these moving averages look like in American Express? Exactly as they should look, but even stronger. Thus, price action and the moving averages are confirming a powerful uptrend.
Investor sentiment can be extracted from the options market. The implied volatility of American Express options is at 21.22 today, which coincides with a 90th percentile over the last 30 trading days. Many investors have been expecting a pullback in the overall markets, so implied volatility levels have risen across many stocks in different industries. However…