Credit-card company American Express Co
The stock, which sank to a low under $10 in March from more than $50 last spring, closed at $18.83 on Thursday on the New York Stock Exchange.
Unlike its peers, American Express gets most of its revenue and earnings from fee income generated by transactions, not from the extension of credit, Barron's said. Its charge cards, which require users to pay off any balance by the end of each month, comprise a substantial share of volume and therefore pose less credit risk, Barron's said.
Still, American Express faces challenges and cannot distance itself from the sorry outlook for home prices and employment, Barron's said.
Yet, William Ryan, of boutique research firm Portales Partners, recently issued a buy rating on the shares at $15, up from a hold rating. Ryan said that even with higher credit charge-offs coming in the near term, the stock is a great buy in the longer term, Barron's said.
Some investors are concerned about the sudden surge in AmEx delinquencies and loan charge-offs, which were higher than its competitors, Barron's said.
By February, charge-offs, or loan defaults, at AmEx had jumped to 9.31 percent, much higher than the industry's monthly average of 7.76 percent. However, the high charge-off rate may be a result of a denominator effects, as the company began reducing outstanding credit to U.S. consumers in the second half, Barron's said.
(Reporting by Ilaina Jonas; Editing by Leslie Adler)