10 Best Stocks to Buy According to Billionaire Mario Gabelli

5. American Express Company (NYSE:AXP)

Number of Hedge Fund Holders: 71

GAMCO Investors’ Stake: $152.6 million

American Express Company (NYSE:AXP) operates as an integrated payments company. Robert W. Baird analyst David George upped the company’s stock to a “Hold” rating, setting a price objective of $265.00. The rating is backed by factors highlighting a balanced risk/reward profile for the company. Despite the market sell-off, the high-quality franchise of American Express Company (NYSE:AXP) is projected to deliver lower revenue growth expectations across operating environments. The company has showcased strong execution on revenue and EPS targets, delivering notable growth in 2024. In FY 2024, the company delivered record revenues of $65.9 billion, implying a 10% increase on an FX-adjusted basis, while EPS came in at $14.01, up 25% YoY.

Furthermore, the analyst opines that the recent underperformance has improved the risk/reward trade-off. American Express Company (NYSE:AXP)’s credit quality remains strong. Elsewhere, Fitch Ratings mentioned about the company’s robust franchise, spend-centric business model, higher-than-average credit performance and profitability, relatively diverse funding, and strong liquidity and risk-adjusted capitalization. Notably, American Express Company (NYSE:AXP) exited 2024 with increased momentum, with billings growth accelerating to 8% in the fourth quarter, fueled by healthy spending from its consumer and commercial customers during the holiday season.

Bretton Capital Management, an investment management company, published a Q4 2024 investor letter. Here is what the fund said:

 “American Express Company (NYSE:AXP) was our best performing stock last year, returning 60%, which was on top of 2023’s 29%. Its premium credit cards are more popular than ever, and its moderately affluent customer base continues to spend. American Express did especially well signing up younger cardholders, a great sign that its growth can be sustained for years to come. The combination of healthy revenue growth and tight expense control led to an earnings-per-share growth of 25%.”