Jim Cramer on Netflix and Other Stocks

8. American Express Company (NYSE:AXP)

Number of Hedge Fund Holders: 68

American Express Company (NYSE:AXP) is a world-famous payments provider, extending a wide range of financial services that include credit and charge cards, banking solutions, and expense management services. In a recent episode of Mad Money, Cramer addressed JPMorgan’s recent downgrade of the stock from Buy to Hold, arguing that the company often rebounds quickly from such downgrades. He criticized the timing, given a potential rate-cutting cycle, and cautioned that selling now might lead to missing future gains. He said:

“.. JP Morgan downgrades the stock from buy to hold. America’s best, they say, ‘represents the asymmetric risk associated with a stock trading near the high end of its valuation range with limited upside to estimates.’ So they say, go elsewhere.

Do you know how many times Amex has been downgraded and gotten right off the canvas a few days later? Do you know how many times it’s bounced back almost immediately? This is the premium global credit card company in the world, and you’re downgrading ahead of a rate-cutting cycle. How about some history, for heaven’s sake?

I say if you sell it at $276, I hope you can get back in,  I don’t know, at $264. If it reports a so so quarter, maybe you can do that. You might leave it, but you may never get back in. And therefore you might miss a much bigger bevy of points, which is what I’m worried about.”

Renowned for its prestigious brand, American Express (NYSE:AXP) has cultivated a reputation that appeals particularly to affluent consumers. Many individuals are willing to pay substantial annual fees for the privilege of carrying an American Express card, drawn in by the premium benefits and exclusive services associated with the brand.

In the second quarter, American Express (NYSE:AXP) reported a significant 44% increase in net income compared to the same period last year, which points to strong financial performance. The company achieved a record revenue of $16.3 billion, which marked an 8% rise in growth. Adjusted earnings per share also saw an impressive 21% increase, reaching new heights amidst a backdrop of favorable trends.

The positive trajectory has instilled confidence in management regarding future performance, leading to revised revenue forecasts for the full year. The company forecasts revenue growth between 9% and 11%, with adjusted EPS expected to range from $13.30 to $13.85, a significant upgrade from earlier estimates.