Jim Cramer Wants You to Watch Out For These 10 Stocks

2. American Express Company (NYSE:AXP)

Number of Hedge Fund Investors: 92

Jim Cramer noted that Bank of America Corporation (NYSE:BAC) downgraded American Express Company (NYSE:AXP) from a “Buy” to a “Hold” due to weaker consumer spending. Despite this downgrade, the analysts maintain a positive long-term outlook for American Express Company (NYSE:AXP). Cramer questioned the downgrade, given the analysts’ continued optimism about American Express Company (NYSE:AXP)’s future.

“Bank of America downgraded American Express to a hold from buy. The analysts cited muted consumer spending. They still like it longer term, however, for which I say: Why downgrade it?”

American Express Company (NYSE:AXP) presents a strong investment opportunity due to its well-established brand and high customer loyalty. American Express Company (NYSE:AXP) is known for its excellent service and exclusive benefits, which attract and keep high-spending customers. American Express Company (NYSE:AXP) has shown strong financial performance, with recent reports highlighting significant revenue and net income growth, largely driven by increased spending by cardholders.

American Express Company (NYSE:AXP) benefits from rising consumer and business spending, evidenced by a 12% year-over-year increase in network spending. Its investments in digital technology and international expansion position it well for capturing a larger share of the global payments market. With a robust balance sheet, solid capital ratios, and a history of returning value to shareholders through dividends and buybacks, American Express Company (NYSE:AXP) maintains strong investor confidence.

Artisan Select Equity Fund stated the following regarding American Express Company (NYSE:AXP) in its first quarter 2024 investor letter:

“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.”