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Credit Card Stocks: Analyst's Picks and Pans

Visa reported strong earnings that topped last year's and outstripped Wall Street forecasts. Craig Maurer, equity analyst at Calyon Securities, discussed his outlook on the firm and other credit card companies going forward.

“We saw Visa posting very strong results and they’re talking about October trends improving to a positive 3 percent in U.S. payment volume, which is material improvement to what we’ve seen all year,” Maurer told CNBC.

Maurer said there are some “headwinds turning to tailwinds” for the credit card company, in terms of gasoline prices and currency exposure due to the weakening dollar.

Maurer weighed in on American Express.

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“They were very aggressive in cashing money into Florida, California, Nevada. We had made a guess back in January when we upgraded AmEx, stating that because of their concentration on clearly the worst markets in the U.S., that those markets would bottom faster and their credit quality would turn the corner at least 6 months ahead of the group—and that’s what we’re seeing with AmEx,” he said.

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“We want to see things with secular growth or transactionary growth that isn’t necessarily related to taking spread on lending, that is expensive for the balance sheet and risky long term,” he said.

“We’d rather be in something like Visa or MasterCard where global growth will continue for many years, providing high topline growth without the need to materially grow expenses for a lot of income statement leverage.”

Maurer Likes:

Visa

MasterCard

American Express

Maurer Dislikes:

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Disclosure:

Maurer does not own shares of Visa. Affiliate of Calyon Securities received compensation from MasterCard for non-investment banking products services in the past 12 months.

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