3 Large-Cap Stocks Itching to Break Out

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tdp2664 InvestorPlace The overall market might be something less than bullish right now, but we're at least starting to see pockets of strength again. So can investors at least tiptoe back into a stock picker's mind-set? The answer is yes, but we do need to ensure we're working with only the best of the best trading setups, where the charts, fundamentals and sentiment are all ready to do their part. To that end, three large-cap stocks are indeed firing on all cylinders — or are very close to doing so. American Express Think consumers still have their purse strings closed tightly? Think again. Retail spending in the U.S. is approaching record levels seen in 2007, and consumer credit levels have grown each month for the past 10 months. Credit card companies like Discover Financial Services (NYSE: DFS ) and American Express (NYSE: AXP ) are reaping the benefits of that trend, too. Discover not only has been profitable for five straight quarters (since Q1 of 2010), it has topped estimates in all five quarters and has sequentially grown its per-share income in all five quarters. In fact, were the prior four quarters an actual fiscal year, DFS would have posted its most profitable year ever. Point being, it's difficult to see the industry's woes in those numbers. Discover Financial isn't exactly the best trading opportunity right now, though. That honor belongs to American Express shares, which are far less stretched right now. DFS has rallied 55% over the past 12 months, while AXP has only rallied 23% and, more importantly, has just now started to test the breakout waters. As the chart below will illustrate, American Express shares spent the better part of 2010 and a great deal of 2011 in a trading range between $37 and $50. We saw a breakout effort unfold in May of this year, but it was upended by August's marketwide decimation. In the meantime, though, AXP shares have fought their way back above the key ceiling at $50 and apparently intend to stay there. But what about the underlying results to support the chart's growth? Don't worry — American Express has it covered. Like Discover, the past 12 months for American Express actually have been the most profitable 12-month stretch ever for the company; last quarter’s EPS of $1.07 also was a record-breaker. It's tough to doubt a company's outlook when it has waltzed into record-breaking territory in an environment like this one, especially when its peers are enjoying similar success.