Charge It: 5 Credit Card Names To Consider (AXP, COF, DFS, MA, V)

The credit card companies have held up well in the past few days, so it may be time to take a look at them. Names like Discover Financial Services DFS, American Express AXP, Capital One Financial COF, Mastercard MA and Visa V have performed well over the recent days, and stocks that hold up well in market corrections tend to be leaders when the market emerges from the correction. Discover is extremely cheap, trading at 10 times earnings, and sports a 1% yield. The company recently said that late payments were at their lowest point since 2006. The company also recently entered the mortgage market, as Tree.com sold its mortgage unit to Discover Financial. It paid $55.9 million for the unit, so it's obvious that Discover sees value in this business, and perhaps even the housing sector. American Express is a favorite of Warren Buffett, who also added Mastercard MA in Berkshire Hathaway's latest 13F filing. These two names are different, as Mastercard has no credit risk, while American Express does. Amex, as the company is often known, trades at 12 times 2012 earnings, and has a 1.5% dividend yield. The company has continued to expand its online payment presence, by launching "Serve." Mastercard operates the payment processing network, and competes with Visa V for this market. Both of these companies are turning more towards mobile payments, as consumers look to pay with their phones, instead of their wallets. Mastercard trades at 14 times 2012 earnings, while Visa trades at 14.2 times 2012 earnings. Both companies pay a small dividend, with Visa yielding 0.8%, and Mastercard yielding 0.2%. The last name to think about is Capital One Financial COF. Capital One was one of the poster children for excess, and received a large bailout during the financial crisis of 2008. Capital One is the cheapest of the group, trading under 7 times 2012 earnings, and the company has restarted its dividend, yielding 0.4%. As credit card defaults continue to subside, I would not be surprised to see Capital One raise its dividend, or initiate a new buyback program. When someone tells you to "just charge it," give them a second listen, and put some of these names in your portfolio.