The pursuit of profit, my dear reader, is often mistaken for a vulgar display. Yet, even the most discerning investor appreciates a well-executed return. Over the past five years, American Express, or AXP as the unimaginative abbreviate it, has delivered a total return of 121% (as of March 17th). A performance, shall we say, that rather eclipses the pedestrian gains of the S&P 500. It seems good sense, properly applied, is still rewarded.
Recently, the market, in one of its periodic fits of pique, has offered us a rather advantageous opportunity. The stock, having retreated some 22% from its December zenith, now presents itself at a more… reasonable valuation. One might almost call it a bargain, were such a term not so dreadfully commonplace.
The Oracle’s Approval
It is always comforting, isn’t it, to discover that a man of impeccable judgment shares one’s inclinations? Berkshire Hathaway, for decades, has held American Express as a cornerstone of its portfolio. Warren Buffett’s endorsement, while hardly a novelty, does lend a certain… gravitas to the investment. Though, one suspects, even without his approval, the merits of the company would eventually become self-evident.
The recent reluctance of the market stemmed, it seems, from a momentary lapse in reason. Just three months ago, AXP commanded a price-to-earnings ratio of 25.6 – a figure bordering on the extravagant. Today, however, one can acquire shares at a considerably more modest 19.5. A pleasing correction, wouldn’t you agree?
The cause of this temporary disquiet? A rather sensational report concerning the potential impact of artificial intelligence. The market, in its usual panic, imagined a future devoid of spending. As if humanity will cease to desire beautiful things simply because a machine can perform a calculation. A most illogical notion.
The Enduring Appeal of Fundamentals
Sentiment, my dear reader, is a fickle mistress. One must always return to the bedrock of value. American Express generated $72.2 billion in net revenue last year, a 10% increase over 2023 and a remarkable 36% surge from 2022. Management anticipates continued growth, projecting annual revenue increases of 10% or more. A most encouraging prospect.
They achieve this, naturally, by attracting new cardholders – particularly those of a younger persuasion – and by subtly encouraging existing clients to indulge their more refined tastes. Profits, they predict, will rise even faster, with earnings per share expected to increase at a mid-teens annual clip. Assuming, of course, that the stock’s valuation remains… sensible. Which, given the current climate, is a perfectly reasonable assumption.
Five years hence, American Express is poised to generate significantly higher revenue and profits. Those who acquire shares during this temporary dip are, shall we say, displaying a rather admirable degree of foresight. To lose one’s opportunity to profit would be a misfortune; to ignore it, a demonstration of pure carelessness.
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2026-03-21 13:52