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Bullish Pattern Targets a 20%-Plus Run in AXP

American Express formed a right triangle with an objective of $110


American Express (AXP) — On Oct. 17, this investment-grade global credit card and travel-related services stock broke from a five-month consolidation on heavy volume. I recommended the stock the next day with a 12-month target of $96 and a trading target of $86.

In late November, AXP announced an agreement with U.S. Bank to accept their credit cards on the American Express network. Analysts are of the opinion that this new arrangement will enhance the experience of AmEx cardholders since U.S. Bank is renowned for its rewards and discounts. Wells Fargo (WFC) also partnered with American Express in August.

The consensus estimate is for earnings of $5.45 per share in 2014, up from $4.91 in 2013, and $6.06 in 2015. S&P has a “five-star strong buy” on the stock with a 12-month fundamental price objective of $109.

AXP’s high-volume breakaway gap in October led to a series of new highs and solid support at about $82. This formed a bullish right triangle with a target of $110.  Traders should buy AXP under $90 with a stop-loss order at $86. Investors may want to purchase it as a long-term holding.

AXP Chart
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