Better Buy: Capital One vs. American Express vs. Discover
Share prices of Capital One Financial (NYSE: COF), American Express (NYSE: AXP), and Discover Financial Services (NYSE: DFS) have each cratered between 35% and 45% since Feb. 20, when the broader stock market began to fall sharply. Credit card companies are inherently more risky than traditional banks because credit card debt almost always has higher charge-off and default rates than other loan categories, even under normal economic conditions. However, because these are large companies likely to survive a downturn, there is potential long-term value, which is why it is good to take a look now when there is lots of potential upside.
All three of these companies struggled in the first quarter of the year. American Express reported a profit of $367 million, a drop of 76% on an annualized basis . This turned out to be the best performance in the group. Discover reported a net loss of $61 million in the first quarter , while Capital One took a net loss of $1.3 billion .
Despite it taking the biggest loss in the group, I actually like Capital One the best in the long term. Here's why.
Source Fool.com
