Among the biggest winners in Wednesdays’s early trading are Pactiv (NYSE: PTV), Advance America (NYSE: AEA), Visa (NYSE: V) and MasterCard (NYSE: MA). 

Signs of Continued Consumer Distress are Pushing these Stocks Higher

Advance America (NYSE: AEA) and BJ’s Wholesale (NYSE: BJS) are both up nearly +5% in Wednesday trading, highlighting the fact that consumers remain under duress. Advance America offers cash advances to credit-constrained consumers, and often sees business spike when the economy is in a funk. BJ’s, like other discounters, is posting solid results with its no-frills low-prices approach.

#-ad_banner-#As the economy rebounds, investors tend to shift back towards traditional forms of banking and shopping. With shares of BJ’s approaching a seven-year high, it’s fair to wonder if the stock’s best gains have already been had.

Shares of Advance America remain out of vogue, despite Wednesday’s advance. That’s because many states are starting to crack down on the “payday loan” business. Advance America recently had to close 92 stores, half of them in Virginia, to comply with new laws.

Action to Take –> The company is still seeing decent growth in the many states that don’t have restrictions. And as more low-income consumers find it difficult to obtain new credit cards, demand may keep rising. Net it all out, and the company appears set for moderate growth during the next few years. Value investors should note that the stock trades for around five times next year’s earnings, while income investors may find Advance America’s 5.6% dividend yield attractive.

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Take the Money and Run

Shares of Pactiv (NYSE: PTV) are up another +5% as another pair of bidders have allegedly emerged for the maker of the Hefty brand of consumer products. The stock is up nearly +20% for the entire week, but if history is any guide, this may be a good time to lock in profits. In many instances, rumored deals fail to come to fruition, especially when markets are in turmoil. Any of the three alleged bidders for Pactiv would need to borrow heavily to complete the deal — right at a time when lenders are focused on the simmering European economic problems. A deal might get done at a price above current levels, but the risk and reward are likely in balance at this point.

Action to Take –> Shares may climb a bit higher as purchase prices are bandied about, but most investors lack the ability to perfectly time their exit. Move on to the next idea.

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Plastic on the Mend

Shares of Visa (NYSE: V) and MasterCard (NYSE: MA) are each up nearly +5% after both credit card processors slumped badly in recent weeks. Current legislative proposals would add certain restrictions to credit and debit card usage, but the respective loss in market value for these stocks vastly outweighs the likely actual negative impact on their businesses. There remains an ongoing migration from the use of cash to the use of plastic and both of these firms are still expected to post robust international growth rates in coming years as penetration rates in certain regions remain far lower than in the United States.

Action to Take –> If an investor had to choose between the two, MasterCard now sports the lower earnings multiple, trading for a very reasonable 13 times projected 2011 profits. A rebounding global economy should generate double-digit profit growth in subsequent years as well. Swipe it.