Buffett's Bet on American Express Pays Off with Over 6,400% Returns - Card Company Continues Growing Customer Base and Revenue
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Warren Buffett has over $20B invested in American Express through Berkshire Hathaway. The stock has crushed the market, returning over 6,400% since 1991.
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American Express continues growing its customer base, adding millions of new cardholders per quarter. It retains premium branding that attracts customers.
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Revenue comes mostly from transaction fees paid by merchants. More customers = more places the cards are used = more revenue.
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American Express is expanding internationally, aiming to boost merchant acceptance rates in big cities across the world. More places to use the cards also = more revenue.
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Despite hitting all-time highs, American Express stock trades at a low P/E of 15.5. Management targets mid-teens annual EPS growth, meaning more potential outperformance.