11. American Express Company (NYSE:AXP)
52 Week Range: $140.91 -$ 261.57
Current Share Price: $259.84
Short interest rate: 1.33%
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) is a financial services company that operates an integrated payment system. Its products and services include credit cards, charge cards, banking, other payment and financing products, and network services. The company charges an annual fee and transaction fees on its cards. The fee model drives loyalty and profitability.
It remains one of the best 52-week high stocks to buy, according to short sellers, given that its core business revolves around an affluent client base that has money to make purchases regardless of the economic situation.
The company has been flying high, expanding its operations and bolstering revenues by over 50% since 2021. Its revenue in the second quarter was up 8.50% to $16.3 billion, driven by higher net interest income, increased Card Member spending, and continued strong growth in card fees. Additionally, American Express Company (NYSE:AXP) is also benefiting from adding 23 million cards in Q2 and expanding to over 30 million merchants.
Optimism for American Express’s future is not unfounded, given the tremendous opportunities for growth created by the rise of digital payments. As the use of cash and checks declines, this creates a favorable environment for American Express Company (NYSE:AXP) to grow its customer base and the amount of payments it processes over time.
Furthermore, this company is excelling in attracting a younger demographic. These customers account for more than 60% of the new consumer accounts and offer a higher potential for lifetime value to American Express compared to acquiring an older cardholder.
American Express Company (NYSE:AXP) stock trades at a forward price-to-earnings ratio of 19, which is a huge premium. However, this is expected of a high-quality enterprise backed by solid underlying fundamentals. Additionally, it offers a 1.09% dividend yield.
In Q2 2024, the number of hedge funds in Insider Monkey’s database with stakes in American Express Company (NYSE:AXP) increased to 68, up from 66 in the previous quarter. The total value of these stakes is approximately $38.48 billion, with Warren Buffett’s Berkshire Hathaway being the largest stakeholder.
Artisan Select Equity Fund commented on American Express Company (NYSE:AXP) in its Q1 2024 investor letter as follows:
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
