Sept. 8 (Bloomberg) -- Here are my quick takes on four stocks that are among the best and worst performers in the U.S. this year.

American Express Co., the biggest U.S. credit-card company by purchases, is the top stock in the Dow Jones Industrial Average. The New York-based company’s stock is up 77 percent through Friday, almost twice as much as the second-best performer, International Business Machines Corp., up 40 percent.

I didn’t like American Express when I wrote about it in May, and I don’t like it now. On May 11 I wrote, “I fear that for Amex, crummy is the new normal.” Since then the stock has advanced to almost $33 from about $26.

As my grandmother said when I was born a boy and she had predicted a girl, “So, I was a little wrong.” I retain my skepticism about this stock.

For seven years, from 2002 through 2008, American Express consistently earned more than $2 a share, and exceeded $3 (before extraordinary items) in 2007. This year, analysts are looking for $1.05, or about half of the profit American Express notched during the glory years.

Those are GAAP earnings, meaning earnings measured under generally accepted accounting principles. Next year on the same basis, analysts expect $1.55.

If they are right, American Express sells for 31 times 2009 earnings and 21 times 2010 earnings. That’s a generous valuation in today’s stingy market.

Idle Plastic

Sure, consumer spending is beginning to improve, which should boost the commissions Amex collects from merchants. In my opinion, the stock has already reflected that improvement by rising 227 percent since March 6.

Don’t forget, wary consumers probably won’t be heating up their plastic as much as they did in the past.

General Electric Co., down about 14 percent, is one of the worst of the Dow stocks so far this year. (Procter & Gamble Co. is also down about 14 percent.) For many years I have been advising readers and clients to avoid this stock. Too high a portion of its sales and earnings came from GE Capital, the company’s big commercial finance arm, which I found difficult to penetrate and analyze.

Now, with GE trading at about $14, down from a high of more than $58 in 2000, I believe the time has finally come to buy it.

I still fret about GE Capital. Yet there is much more to GE, which is based in Fairfield, Connecticut. It builds nuclear power plants, locomotives, aircraft engines and medical imaging devices.

I think the stock is undervalued, even assuming one puts a value of zero on GE Capital. Skeptics, including short sellers I’ve talked with, argue that GE Capital is worth less than zero. I doubt that.

Certainly, there is risk in buying GE. For example, the company’s debt was equal to 459 percent of equity as of June 30.

First or Second

Yet to me, the weight of the evidence paints an improving picture. In the past four quarters, GE’s net debt has shrunk to $417 billion from $491 billion. Cash on the balance sheet has increased to $52 billion from $19 billion.

GE has a reputation for being either first or second in every field in which it operates. The company’s stock market value, at $147 billion, is about 1.5 times non-finance revenue and 0.9 times total revenue. To me, that has the scent of a bargain.

XL Capital Ltd. is the biggest year-to-date winner among the 500 stocks in the Standard & Poor’s 500 Index. The Bermuda- based insurer and reinsurer is up 355 percent.

Revival Story

The upsurge brings XL shares back near $17, where they were last summer, before dropping to about $2.60 in February. The high, reached in 2002, was more than $95.

XL stock’s near-death experience arose when investors started to worry about the company’s soundness. Its assets included a number of mortgage securities and other investments that looked shaky.

Unrealized losses on those investments have now narrowed. Also the company wangled a back-up agreement with Warren Buffett’s Berkshire Hathaway Inc., under which Berkshire stands behind certain insurance policies issued by XL.

Of 15 analysts who cover XL, only six rate it a “buy.” I agree with the minority of bulls, partly because XL looks inexpensive at 0.8 times revenue and 0.9 times book value (assets minus liabilities).

The biggest loser in the S&P 500 this year is Marshall & Ilsley Corp., the largest banking company in Wisconsin. Amid rising real-estate lending losses, its shares have fallen 50 percent this year, to $6.86.

Speculative Play

The Milwaukee-based company lost $2 billion in 2008, and took $1.7 billion in money from the government’s Troubled Assets Relief Program. It has $3.6 billion in nonperforming assets, consisting of $2.4 billion in non-accrual loans, $818 million in restructured loans, and $357 million in so-called other real estate owned, which is basically repossessed buildings.

Seven of the 21 analysts who cover Marshall & Ilsley rate it a “sell,” which in my experience is a huge number. On Wall Street, sell recommendations are seldom heard.

My take? Stay away if you want safety. But if you allocate a small portion of your portfolio to speculation, Marshall & Ilsley makes an intriguing flyer. The stock sells for only 0.5 times revenue and 0.5 times book value.

Disclosure note: Personally and for clients, I own shares of Berkshire Hathaway. I have no long or short positions in the other stocks discussed in this week’s column.

(John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)

To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com.

Last Updated: September 7, 2009 21:00 EDT