When Warren Buffett’s Berkshire Hathaway first invested in American Express Company (NYSE: AXP) stock in the first quarter of 2001, little did anyone know that it would mark the beginning of a soaring journey for the stock. Over the past two decades, the investment has seen remarkable growth, with the stock surging by about 350% since mid-February 2001. Today, American Express continues to impress Wall Street with its performance, and the company’s upward trajectory has left many investors astounded.
Reflecting on the historical context, Berkshire Hathaway’s unwavering belief in American Express stock has significantly translated into substantial gains for investors. If one had invested $1,000 in the stock at the time Buffett expressed his confidence in it, that investment would have blossomed to a remarkable $4,530 today. This represents a staggering 353% return, translating to an impressive 9.2% Compound Annual Growth Rate (CAGR). These statistics simply underscore the extraordinary performance of American Express as a long-term investment.
Berkshire Hathaway’s enduring interest in American Express is unmistakable, given that the company remains their third-largest holding, encompassing a substantial 7.12% share of their portfolio. In fact, Berkshire Hathaway effectively owns more than 20% of the company, a testament to their resolute confidence in the stock’s potential.
Despite American Express stock’s meteoric rise, investors must grapple with the crucial question – is there any upside remaining? The stock has surged by 20.5% over the past year, prompting concerns about its future potential. However, American Express is well-positioned to weather the storm, especially in light of the Federal Reserve’s move to lower rates, which is expected to bolster credit card spend and contribute to Amex’s business growth. Furthermore, Amex’s bank holding company status affords the company diversified revenue streams, lower borrowing costs, and access to Federal Reserve funding. These factors collectively serve to reinforce the stock’s resilient investment case, despite its substantial recent gains.
Financial sector investors evaluating American Express stock have adopted a neutral stance, as per consensus estimates. However, recent reviews from analysts have seen an uptick in price targets for the stock, underlining the stock’s potential for further growth.
- Deutsche Bank initiated coverage on Jan. 10 with a Buy rating and a price target of $235 on the stock.
- JP Morgan’s coverage from Jan. 4 raised their price target from $167 to $205.