Companies don’t operate in a vacuum. They have competitors, and often look to see what a competitor is doing to see if it’s an idea worth emulating (or not). Sometimes, a company gets into legal trouble.
Legal cases can drag on for years. And they can cost millions of dollars. And customers may want to shop and invest elsewhere while a lawsuit plays out. That may create opportunities for a company to grow their market share while their competitor is defending themselves.
Earlier this week, credit card network giant Visa (V) sank on news of an antitrust lawsuit filed by the Department of Justice. Visa is by far the largest player in the game, but the other companies in the network payment oligopoly could end up gaining market share.
Among the other big players, American Express (AXP) caters to a higher-income customers, and tends to carry a premium.
But right now shares trade at about 18 times forward earnings, even after rising 77% over the past year.
Action to take: American Express is a top brand, and can likely grow its market share as long as Visa has to defend against a suit. Shares are worth picking now, and during any market selloff.
At current prices, AXP also pays a 1% dividend, which it has a history of growing over time.
For traders, the January 2025 $290 calls, last trading for about $7.75, could see mid-double-digit returns if shares break higher into early next year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.