Don't leave home without your American Express shares

Further, American Express has already warned investors to expect a 200-300 basis point increase in managed charge-offs for Q2 and Q3, for its U.S. card service (which account for more than 85% of total managed loans globally). The aforementioned assumes that the U.S. unemployment rate will rise to 9.9% by December 2009, and not higher. The First Call F2009/F2010 EPS estimates for AXP are 82 cents / $1.25.

Given the current investment climate and economic headwinds, AXP should have tanked massively on the charge-off forecast, but it hasn't: it's held above $22, and even more important, above the psychologically-significant $20-level.

This suggests institutional investors are remaining committed to the stock, and that fact, combined with AXP's effective expense controls, a decent projected net interest margin, and a p/e of 12, warrant a Buy rating here, but keep in mind this is a high-risk stock. Also note the tight $14 Sell/Stop Loss.

Stock Analysis: American Express is a high-risk stock. Consider buying a 25% position in AXP now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your AXP position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $14.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.