Unlocking Berkshire Hathaway’s Secret to Success
The Oracle’s Favorite Stock
Warren Buffett’s Berkshire Hathaway has been making waves in the investment world, and its top stock holding is no exception. While Apple remains the conglomerate’s largest equity position, American Express has emerged as a dark horse, with Buffett holding tight to his shares despite their impressive 58% surge in 2024.
A Unique Business Model
American Express’s integrated payments and banking operations have enabled the company to achieve spectacular earnings growth, even as revenue growth slows. With a 28% year-over-year increase in earnings per share (EPS) in the trailing-nine-month period ended September 30, 2024, the company’s strong credit and operating leverage are driving its success.
Triple-Threat Growth Story
American Express benefits from multiple growth levers, including 6% growth in card member spending, 18% growth in card fee revenue, and a 17% increase in net interest income. This diversified growth strategy increases the odds of strong revenue growth rates for the foreseeable future, making the company an attractive investment opportunity.
Is American Express Stock Worth Buying?
With a price-to-earnings ratio of 22 and a forward P/E of 20, American Express shares appear undervalued compared to the S&P 500 index’s ratio of about 25. The company’s strong business momentum suggests it can easily live up to its current valuation, making it an attractive long-term investment.
A Word of Caution
While American Express shares look promising, investors should remember that no investment is without risk. There’s no guarantee that the current price is the best entry point, and investors should always consider their individual financial goals and risk tolerance before making a decision.
Expert Insights
Before investing in American Express, consider the expert analysis from The Motley Fool’s Stock Advisor team, who have identified 10 top stocks for investors to buy now. With a proven track record of success, their guidance can help you build a diversified portfolio and achieve long-term financial success.
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