Top stock in Berkshire Hathawayof (NYSE: BRK.A) (NYSE: BRK.B) Equity portfolio remained apple (NASDAQ: AAPL ) At the end of the third quarter. But Oracle of Omaha was selling large chunks of the position through 2024, and it’s likely to continue through the fourth quarter. So, what is Berkshire’s biggest bet if you take out the stocks Berkshire has recently sold? American Express (NYSE: AXP ). The integrated payments company, which operates as both a bank and a credit card specialist, is Berkshire’s biggest holding after Apple — and the famous investor hasn’t sold a single share.
Berkshire has held on to its American Express shares despite a steep rise over the past year, suggesting Buffett may believe the stock can go even higher. Should investors buy shares, mimicking Berkshire’s bet on American Express as the Buffett-led conglomerate maintains its large position in financial stocks? Or did investors who failed to buy and hold the stock last year? Ultimately, the shares gained 58% in 2024.
Thanks to its unique business model, American Express has been able to grow earnings at an incredibly high rate recently, even as revenue growth has slowed. On 9% revenue growth, the powerhouse payments and banking company’s earnings per share (EPS) rose 28% year-on-year in the nine-month period ended September 30, 2024.
Such strong earnings growth has been fueled by strong credit and operating leverage. In fact, management had to raise its guidance for full-year earnings per share when it reported third-quarter results. Previously, management was guiding EPS for the period to be between $13.30 and $13.80, but now management expects it to be between $13.75 and $14.05.
Additionally, although American Express’ 9-month revenue growth rate of 9% is lower than the 14% growth the company had achieved for the full year to 2023, it’s worth emphasizing that the strong Why single-digit growth looks sustainable for the future: The company benefits from different growth levers simultaneously.
Consider that American Express’ 8% year-over-year top-line growth in the third quarter of 2024 includes 6% growth in card member spending, 18% growth in card fee revenue growth (a faster rate from Q2), and net interest 17% increase in revenue as the company’s lending operation continues to gain traction with its customers. This triple-threat growth story raises the prospect of strong revenue growth rates for the foreseeable future, as one leg of the stool can pick up the slack for the other as the economic environment changes.
