1 Warren Buffett Stock to Buy Hand Over Fist in November

American Express (AXP) is highlighted as a compelling investment, consistently held by Warren Buffett since 1995, demonstrating strong Q3 2023 performance with revenue up 9% and EPS up 19%, leading to raised full-year guidance. The company's fee-based model successfully targets affluent consumers, who exhibit spending resilience in the current economic climate, and is expanding its customer base significantly among millennial and Gen Z demographics. This strategic positioning, coupled with network effects, underpins AXP's sustained growth potential and market outperformance.

Analysis

American Express (AXP) demonstrated robust financial performance in Q3 2023, reporting a 9% year-over-year revenue increase to $421 billion and a 19% rise in EPS to $4.14. This strong showing prompted management to raise its full-year guidance, projecting revenue growth from a low of 8% to 9% and EPS from $15 to $15.20, signaling positive momentum into the holiday season.

The company's strategic focus on its affluent customer base, characterized by a successful fee-based model, continues to drive growth. Notably, 72% of Q3 new card acquisitions were fee-based, and new U.S. Platinum account acquisitions doubled post-refresh despite increased annual fees. This segment of high-income earners exhibits significant spending resilience, aligning with the "K" economy trend where higher-income individuals maintain strong discretionary spending.

AXP is also effectively expanding its future growth pipeline, adding 3.2 million new cards in Q3, with 64% from millennial and Gen Z demographics. These younger cohorts now account for 36% of total spend, matching Gen X, indicating strong future spending potential. The company's network effects, where increased membership attracts more merchants, further solidify its long-term growth prospects and reinforce its position as a "classic Buffett stock" held since 1995.

Key Decisions for Investors

• Investors should consider AXP's strong Q3 performance and raised full-year guidance as indicators of continued operational strength and potential for near-term outperformance
• Monitor the resilience of the affluent consumer segment and the successful integration of millennial and Gen Z cardholders as key drivers for sustained long-term growth
• Evaluate AXP's strategic positioning within the "K" economy trend and its network effects as factors supporting its economic moat and potential for consistent shareholder returns