American Express Company (AXP), Mastercard Inc (MA), Visa Inc (V): Credit Card Companies Could Cash in on Jobs Creations

Page 1 of 2

With the United States economy appearing to be on rebound and jobs spreading like wildfire, there is a sense of optimism about the economy that might be the strongest we’ve seen since the recession. The U.S. added 175,000 new jobs last month, after hiring an additional 150,000 in April, the Labor Department stated.

So with so many people securing jobs, what does that mean for credit card companies? After all, a survey by Manpower Group, an international employment services titan, says more employers throughout the U.S. are planning on hiring workers in the next quarter than in any period since 2008′s fourth quarter.

What it all means

American Express Company (NYSE:AXP)

If a continued increase in hiring proves true, there will be a considerable number of people with money again. For American Express Company (NYSE:AXP), MasterCard Inc (NYSE:MA) and VISA Inc (NYSE:V) that means two things: more people will be able to pay off their credit card bills, and more people will be making additional purchases. In other words, credit card companies could cash in on late payments that have been piling up since the recession, and those same people will likely buy on credit again.

American Express’s story

American Express Company (NYSE:AXP) has increased by about 35% year to date, and that is a substantial hike from moderate gains in the previous post-recession years. Consumers are gradually becoming more optimistic and even reached a six-year high in confidence recently. The economic recovery will mean increased use of credit cards, as people feel more comfortable making purchases. There will be a likely decrease in accounts receivable and an increase in revenue. Some doubt does linger, however, as American Express relies on public credit card debt for much of its earnings. The future may appear relatively uncertain, but the general economic recovery will fuel this stock’s performance despite decreasing consumer debt.

MasterCard’s story

Mastercard Inc (NYSE:MA) has a premium value, which could indicate the stock is ready for substantial growth. The company’s past performance speaks for itself — as the firm has had a return on investment of five times more than Visa Inc (NYSE:V) since the recession — but determining whether the future will repeat itself takes a bit of digging. The company is increasing its presence in China, Africa and the Middle East, which will likely provide a major source of revenue from not only those who live in these countries, but also from those who travel for business or pleasure. MasterCard is reportedly in negotiations with Kenyan banks, which would service a huge number of potential customers. As the standard of living in Africa improves, the 80% who don’t use a bank will gradually decrease, and MasterCard is in a position to cash in.

VISA’s story

VISA will see some of the same benefits, but the company is in a stronger financial position than American Express Company (NYSE:AXP) and Mastercard Inc (NYSE:MA). The firm is nearly twice as big as both companies, and this could help to execute its vision of global payment options. The company is creating payment networks that will facilitate the ease for tourists and business people to use their cards seamlessly throughout the world. That’s a move in which American Express hasn’t been as active. Unlike Visa Inc (NYSE:V), American Express’s growth is mainly driven by adding new products and services.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!