15 Best Stocks to Buy According to Hosking Partners

7. American Express Company (NYSE:AXP)

Hosking Partners’ Stake Value: $72,296,625

Percentage of Hosking Partners’ 13F Portfolio: 2.67%

Number of Hedge Fund Holders: 68

American Express Company (NYSE:AXP) operates through multiple segments—U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services—contributing to its diversified revenue streams. The company continues to showcase strong financial performance, making it an attractive investment due to its solid fundamentals. In Q2 2024, American Express reported impressive earnings per share (EPS) of $4.15, significantly exceeding expectations of $3.26, demonstrating its ability to generate strong earnings even in challenging economic conditions.

The company achieved a 9% year-over-year revenue growth, driven by strong performance across all major segments and regions. This growth is largely attributed to its premium customer base, known for high spending and excellent credit profiles. American Express has consistently attracted and retained these customers, evidenced by 24 consecutive quarters of double-digit growth in card fee revenue. Strategic investments in marketing, product innovation, and technology further enhance customer loyalty and engagement.

The sale of Accertify in Q2 2024 added an after-tax gain of $479 million, which American Express plans to reinvest into its core business, emphasizing its commitment to sustainable growth. The company’s disciplined expense management and ability to scale operations efficiently allow for substantial investment in growth initiatives while still delivering strong earnings. With an increased EPS guidance range of $13.30 to $13.80 for the full year, American Express is well-positioned for continued growth, making it a strong buy for investors seeking reliable returns.

Artisan Select Equity Fund highlighted American Express Company (NYSE:AXP), in the first quarter 2024 investor letter in the following words:

“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.”