Classic Value Investing Right Now: American Express Stock at $55

Since June 2014, shareholders of American Express (AXP) have lost 33% of their initial investment (counting dividends). A fair chunk of those declines came today, when a weak earnings report for the New York payment merchant caused the investor community to respond by lowering the price of the stock 12% in a single day. Much of this apprehension is the result of the inadequacy of American Express’s initiatives to keep up with Visa and Mastercard coupled with the loss of the lucrative exclusivity relationship that American Express once shared with Costco.

And for those looking ahead, Marriott’s merger with Starwood may prove detrimental to American Express. JP Morgan has an existing relationship with Marriott, and Starwood has an existing relationship with American Express. Most likely, there will be a renegotiation to bring the hotel chains under one card servicer. If JP Morgan is chosen, then American Express will have to … Read the rest of this article!