Shares of American Express (AXP) plunged on Thursday after reports that Costco will no longer be accepting the card in its stores. Here’s what the news means for mutual fund investors.
Inside the News
Starting in March 2016, Costco will stop accepting American Express cards in its stores after a 16-year deal. Currently, the retailer has an exclusive deal with American Express, as it is the only credit card accepts at its stores.
Shares of American Express plunged on Thursday as management reported that the terminated deal would cut into profits. The deal with Costco accounts for about 20% of its worldwide loans and 10% of its cards in force.
Little Support for Shares
On Friday morning, Wall Street analysts began downgrading the credit card company, as a decent portion of its profits will disappear in 2016. The stock is trading around 52-week lows and has a dividend yield just over 1%. With its declining share price and low dividend yield, it is tough to make an argument for investors to step in.
Mutual Funds to Watch
Investors interested in AXP may be interested in the funds listed below. These funds currently have the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VTSMX | Vanguard Total Stock Market | 1.68% |
| FCNTX | Fidelity® Contrafund® | 1.54% |
| NYVTX | Davis NY Venture | 1.33% |
The Bottom Line
The funds listed above allow investors to gain exposure to AXP while remaining diversified. Investors interested in AXP may also be interested in Visa (V) or Mastercard (MA).