5 Undervalued Blue Chip Stocks to Buy Now

3. American Express Company (NYSE:AXP)

Share Price as of June 6: $166.83

Number of Hedge Fund Holders: 69

American Express Company (NYSE:AXP) is a New York-based company that provides payment card services globally. The company is the third biggest holding in Warren Buffett’s Berkshire Hathaway Inc’s (NYSE:BRK-B) portfolio as of March 31,

At a forward adjusted P/E multiple of 17x, American Express Company (NYSE:AXP) stock is trading at a discount of 7.4% when compared against the five-year average forward adjusted P/E multiple of 18.36x. The company generates revenue from two sources: cardholders and merchant transactions. The revenue from merchant transactions reflects less volatility as it is dependent on the number of merchants using the service of American Express Company (NYSE:AXP). However, the cardholders would be impacted by the hike in interest rate as they are charged a variable APR on their balances.

In its Q2 2021 investor letter, ClearBridge Investments mentioned American Express Company (NYSE:AXP). Here’s what the firm said:

“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”

American Express Company (NYSE:AXP) was held by 69 hedge funds as of Q1 2022.