6. American Express Company (NYSE:AXP)
Year-to-Date Return as of December 25: 61.15%
American Express Company (NYSE:AXP) ranks sixth on our list of the best performing stocks in 2024. The American bank holding company offers a wide range of related services to its consumers. It is a strong company due to its economic moat, which includes lasting competitive advantages that have strengthened its position in the industry and shielded it from competitors. One of the key elements of this moat is its brand, which is perceived as premium. This reputation helps the company attract high-income customers who have the means to spend more than the average consumer. By focusing on this demographic, American Express is able to charge high annual fees for its premium credit cards. Despite these costs, the number of active cards has grown steadily, increasing from 111.1 million in Q3 2014 to 145.5 million in the most recent quarter. In addition, the company has seen a 13% year-over-year increase in average fees per card in Q3.
In the third quarter of 2024, American Express Company (NYSE:AXP) reported revenue of $16.6 billion, which showed an 8% growth from the same period last year. This was the company’s 10th consecutive quarter of record revenue. It also saw a 6% increase in total Card Member spending, with card fee revenue growth accelerating to 18%. The company successfully attracted 3.3 million new premium Card Members while maintaining high retention rates, strong credit performance, and cost discipline. Based on its strong performance and the solid earnings generated by its core business, the company raised its full-year EPS guidance to $13.75 – $14.05, up from the previous range of $13.30 – $13.80. Full-year revenue growth is still expected to align with the initial guidance, around 9%.
GreensKeeper Asset Management mentioned the company’s growth in its Q3 2024 investor letter:
“American Express Company (NYSE:AXP) was our second-largest contributor this quarter, with a return of +17.1%. AXP continues to invest in its customers beyond traditional credit card rewards, recently enhancing its Global Dining Access to provide Platinum cardholders with exclusive reservations at premier restaurants worldwide. This focus on unique experiences has attracted a younger demographic, with millennials and Gen Z driving most of the customer acquisition and card spending growth in recent quarters. Exclusive events are more challenging to replicate than standard point reward systems, presenting a challenge for competing card issuers that lack AXP’s scale and concentrated base of affluent consumers. AXP has fine-tuned its offerings over decades to strengthen its network effect and shows no signs of slowing down.”
American Express Company (NYSE:AXP) remained committed to its shareholder obligation as the company returned $15 million to investors through dividends in the most recent quarter. The company has raised its payouts twice this year and offers a quarterly dividend of $0.70 per share. The stock has a dividend yield of 0.92%, as of December 25.
American Express Company (NYSE:AXP) was a part of 62 hedge fund portfolios at the end of Q3 2024, compared with 68 in the previous quarter, according to Insider Monkey’s database. These stakes are valued at over $45 billion in total. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
