We recently compiled a list of the 10 Best Digital Currency and Payments Stocks To Invest In. In this article, we are going to take a look at where American Express Company (NYSE:AXP) stands against the other digital currency and payments stocks.
The Digital Payment Revolution: Growth Trends and Insights
The digital currency and payments sector is rapidly evolving, driven by technological advancements and changing consumer expectations. Digital money continues to reshape how transactions are conducted, making them faster, cheaper, and more accessible. According to a report by The Business Research Company, the global digital payments market was valued at $115.93 billion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 9.3% during 2024-2028 to reach a value of $180.26 billion by the end of the forecast period.
The rise of e-commerce and technology-driven initiatives is significantly boosting the digital payments market. Consumers are increasingly choosing non-cash payment methods because they are easier and more convenient for transactions. This trend is expected to lead to a growth in low-cost payment terminals and methods like QR codes in the near future.
A major driver behind this shift is the younger generations, particularly millennials and Generation Z, who are quick to adopt digital payment services. Online banking has become a popular choice among young users, who demand personalized and flexible experiences. As businesses adapt to these expectations, enhancing customer experience has become crucial for success in the competitive digital payment landscape.
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The McKinsey Digital Payments Survey 2024 reveals that the use of digital payments is steadily increasing in both the United States and Europe. Approximately 9 in 10 consumers in these regions have made at least one digital payment in the past year, with the US reaching a record high of 92%. In the US, in-app and in-store digital payments are growing rapidly. In-app purchases now account for 60% of digital payment usage, up by 8 percentage points since 2019. Additionally, the adoption of digital wallets for in-store transactions has risen from 19% in 2019 to 28% in 2024. This shift represents a significant market, with around $10 trillion spent annually by consumers across the United States and Europe.
Notably, the survey also found that about one in five users often leave their physical wallets at home, opting for digital payment methods instead. In-store digital wallet usage is similar between the US and several European countries. This also includes traditionally cash-heavy nations like Germany and Italy, where about a quarter of respondents reported using digital wallets for in-store purchases in the past year. This trend indicates a broader acceptance of digital payments among consumers across various markets.
Methodology
To compile our list of the 10 best digital currency and payments stocks to invest in, we consulted various online resources and also reviewed our own rankings. This exercise provided us with a list of the best digital money stocks. From an initial pool of more than 20 digital currency and payments stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best digital currency and payments stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
American Express Company (NYSE:AXP) is a leading global payments company that is known for its integrated platform that includes card-issuing, merchant-acquiring, and card network services. The company caters to a wide range of clients, from individual consumers to large corporations, making it a significant player in the payments industry.
In the third quarter of 2024, American Express Company (NYSE:AXP) achieved record revenues of $16.6 billion, marking an 8% increase compared to the previous year. The net income also rose to $2.51 billion, or $3.49 per share, up from $2.45 billion or $3.30 per share a year earlier. This financial performance highlights the company’s robust growth trajectory and effective management strategies. A key driver of this success is the increase in Card Member spending, which grew by 6% in the same quarter. Additionally, revenue from card fees surged by 18%, demonstrating the company’s ability to attract and retain premium card members. American Express Company (NYSE:AXP) welcomed 3.3 million new premium card acquisitions, maintaining high retention rates and strong credit performance.
The company has been actively refreshing its product offerings to meet evolving consumer needs. Since the start of 2024, American Express Company (NYSE:AXP) has completed 40 product refreshes, including the launch of a new US Consumer Gold Card tailored for Millennial and Gen-Z consumers, who represent 80% of new accounts for this product. These product enhancements focus on popular categories like dining, which has seen a 7% increase in spending year-over-year.
AXP is one of the best digital money stocks to buy. Given these positive trends in financial performance, innovative strategies, and strong market positioning, American Express Company (NYSE:AXP) presents a compelling investment opportunity in the digital currency and payments sector.
GreensKeeper Asset Management stated the following regarding American Express Company (NYSE:AXP) 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.”
Overall AXP ranks 7th on our list of the best digital currency and payments stocks to invest in. While we acknowledge the potential of AXP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AXP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
