Glancing at the latest closing price of American Express (AXP 0.36%) might produce a degree of sticker shock. Anyone interested in buying into the storied credit card giant will have to part with more than $310 for a mere single share of the company.
Many famous stocks are a fraction of that amount, but over time, the card titan tops more than a few of them on one crucial financial metric.
Rock-solid profitability
That quite basic yardstick is net income. Witness the pleasing upward slope of AmEx’s headline profitability over time, particularly in these past few years:
AXP net income (annual), data by YCharts.
Over a 30-year span, and despite the occasional dip, annual net income has generally headed north. In fact, in 2024, the company notched a new all-time record for the line item, which landed at over $10 billion.
AmEx has a great many factors going for it, and its clever management has proved adept at taking advantage of basically all of them.
The company issues some of the most attractive credit cards on the market, not least because of its ever-appealing Membership Rewards program. Cardholders can easily earn perks and bonuses even if they don’t spend piles of money.
Also, it is both the issuer of its plastic and the processor of its transactions. As the issuer, it has reams of data on its cardholders, and as such can tailor Rewards offerings quite specifically to them. This makes its product sticky; customers tend to keep using their AmEx cards for years, even decades.
Winning the fight
AmEx also benefits from the war on cash. Around the world, consumers are shifting away from cash purchases to other means such as credit/debit cards. And the more the world’s population desires these highly convenient instruments, the more card companies benefit.
With that trend set to be in force for a long time, on top of a global economy that’s generally rising, American Express is a great buy-and-hold stock. It’s hard to be disappointed with this company.
American Express is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
