2 Pros discuss American Express, offer alternative ideas

UBS analysts turned bearish on payments giant American Express Company (NYSE: AXP) amid expectations for a prolonged recovery but these two rivals are better plays, according to

Amex is overexposed to corporate travel

American Express has a large amount of exposure to corporate travel and that will likely be among the last segments of the economy to fully recover from the global COVID-19 pandemic,  Michael Binger of Gradient Investments said on CNBC’s “Trading Nation.” As it stands right now, most large corporations still have the majority of their workers at home so UBS’ move to turn bearish on the stock is understandable.

A more reasonable investment idea for anyone still interested in the financial and payments sector is to buy stocks of companies that stand to benefit from the transition of cash and checks to online alternatives.

“We feel this is a secular trend — one we think will happen for years to come,” he said. “And COVID-19 and what’s happened has only accelerated this ongoing trend.”

This gives companies like Square Inc (NYSE: SQ) and Paypal Holdings Inc (NASDAQ: PYPL) a unique characteristic that few others in the financial sector universe can offer the investment community: growth.

Oppenheimer’s Wald Likes Mobile Payment

Oppenheimer’s Ari Wald also said on the “Trading Nation” segment his research firm is bullish on the mobile payment space, especially the exchange traded fund EFT Managers TR Prime Mobile (NYSE: IPAY). The research firm is also bullish on the fintech stocks that are part of the S&P Technolgy Sector, including Square, Paypal, Visa Inc (NYSE: V) and Mastercard Inc (NYSE:MA).

Investors are encouraged to avoid fintech stocks that are part of the financial sector, including American Express.

Square stands out

Square deserves to be singled out among the group. From a technical analysis perspective, shares of Square started to really break out in June when it broke above a key resistance level of around $85 per share.

Since then, Square’s stock has shown continued momentum and shares not only traded above its 2018 peak on Monday, but hit a new all-time high of $105.46.

“We see additional upside for the stock price of Square,” he said.

Binger said he agrees and views the fintech payment company as part of the secular tailwind theme previously mentioned. Granted, the stock is “expensive” in the triple-digits but it will continue to show growth so “we continue to hold Square — and we like it here.”