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Tuesday, October 12, 2010

AXP... the more and more i think

The more and more I think about AXP the more I like it, especially here. It was upgraded this morning by an analyst. I always try to view an analyst opinion without bias, and happen to agree with the thought of the upgrade here. (Valuation and its technical position is why I purchased it last week.) Basically it is an upgrade due to valuation.

By the end of the year, AXP will have earnings of 3.30 (as per consensus Yahoo estimates). If we assume a trailing PE of 14, AXP should be around 46 by year end. AXP has been consistently trading with a trailing PE of 14-15 since the crash. (I verified this myself.)

The chart looks interesting here. AXP is clearly in a mid-term negative trend, but near its bottom end support.

If valuation means anything, AXP will see 46. If it sees 46, it will breakout technically and potentially go higher.

I was originally planing on selling at 41, but with the above assessment, I will sell at 46.

(If AXP decides to re-test 37, I will double down.)

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