As we’re all acutely aware of, in society today there is a growing reliance to use credit cards to pay for anything and everything, from the weekly shop to weddings. However, quite surprisingly credit card companies are often overlooked from an investment perspective. For both an established and novice trader they can be great means to actually making money – rather than just a means to accumulate debt!
The only catch is the fast pace of the industry, meaning that a company could be high up in the market one day and have considerably dropped the next. Investors therefore need to be well informed and trade intelligently for both their short and long term profits. In this article let’s look at the top five worth investing in.
1. Capital One
Capital One has good interest rates for beginner investors and those who prefer to use automatic investment plans, also offering good rates to customers of the Capital One bank. The account minimum is $0 and the broker fees and relatively cheap.
This company does however lack trade platforms and commission free-ETFs. There’s also a limited selection for diversified investors. Therefore, while this company is perfect for first time investors still trying to grow in the market, it might not be the best option for fully grown investors who already have diverse portfolios.
2. America Express
American Express is anticipating declines in earning for the remainder of this year. While this isn’t what you want to see in the first sentence of a potential investment venture, it has just detached from business with the Costco card portfolio, which means potential for growth.
As well as this, in an industry threatened by potential threats like decreased gasoline prices and lower airline prices, American Express is creating partnerships with emerging companies like Uber and Airbnb with higher chances of penetrating the new and younger market. For a short term investor, this would not be a good venture, but if you are looking to reap profits in the long-term, then American Express could be a great option.
3. Visa
Visa is a large competitor of American Express, but with more positive momentum working in its favour. A strong player in the global market, it has a record of double-digit percentage growth and an even brighter future ahead.
Given the poor state of the economy, Visa deserves its profits for managing to stay afloat when giants like American Express were sinking. This success can be partly attributed to the fact that Visa has embraced technology, making it easier and more efficient for customers to conduct their businesses. If you are an investor looking for solid growth prospects, then you should invest here.
4. MasterCard
This company offers great business, but at a high price. The market volatility of 2016 makes every investment a risk, but MasterCard stock has an impressive growth record. When other companies were struggling to survive, this company was bringing in revenues up to 25% of its initial cost.
Their capital allocation is remarkable, and so is their earning track record. For big risk takers who have a lot of money to gamble, this would be a good fit.
5. Discover Financial
The shares of this company are down 6%. This is a bad start, but it’s important to look beyond bad economic times and a few loses and see the potential. For the kind of investor who likes to invest for long term profits and growth projections, this could be the right company for you. The multiple earning is for this company is just a little over 9 – impressive for a company in the 2016 economy.
The valuation and stock performance of Discover is also very impressive. If you’re the kind of investor who likes to evaluate whether or not to invest in a company based on its dividends, then you should know that this company has returns just over 2% with payments of between 20 to 25%.
Discover is yet to break even in the market, but with its high customer appeal this is bound to happen soon, and as an investor it would be good to get ahead of the crowd and be there to reap the benefits.
Now that you have a better understanding of which credit card companies are worth investing in, before you go ahead and start trading be sure to seek advice from an established broker. As with all investment, this along with understanding the risks involved is hugely important to minimising your chances of making profit, rather than loss.
The goal here at Think Credit Cards is to aid you financially – not make you worse off! With this in mind never invest more than you can stand to lose, and be sure to trade intelligently.
