American Express and Discover Hit 52-Week Highs Again

American Express AXP and Discover DFS reached new multiyear highs of $53.69 and $27.92 per share, respectively, Thursday morning. American Express recently launched a free tool designed to help small businesses monitor social media and also said members could use reward points to buy Facebook ads. The New York-based company is known for its revolving credit cards and travelers checks, but also publishes magazines and operates travel agencies. American Express has a market cap of $64.5 billion. The dividend yield is 1.3% and the return on equity is 26.5%. The long-term EPS growth forecast is 11.3%. The P/E ratio is less than the industry average. The stock has grown about 25% since the beginning of the year, outperforming the broader markets, but underperforming competitors MasterCard MA and Visa V. Discover earnings have grown in each of the past five quarters, easily topping consensus estimates each time; the beat was by 45% in the most recent quarter. The Riverwoods, Illinois-based company has a $15.0 billion market cap and it offers credit cards to 25 million members, as well as issuing student loans and operating an ATM network. The company's P/E ratio of 9.1 is much less than the industry average, and the long-term EPS growth forecast is 10.0%. It has a PEG ratio of 0.9 and a dividend yield of 0.4%. The share price has risen more than 45% year to date. In that time, the stock has outperformed competitor American Express and the industry average, as well as the broader markets. Action Items: Bullish:Traders who feel optimistic about the financial sector might want to consider the following trades:

• SPDR Financial Sector ETF XLF
• Vanguard Financials ETF VFH
• iShares Dow Jones U.S. Financial Sector ETF IYF

Bearish:Traders who feel pessimistic about the financial sector may want to consider these alternate positions:

• ProShares Ultrashort Financials ETF SKF
• Direxion Daily Financial Bear 3X Shares FAZ
• ProShares Short Financials SEF

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