2 Top Buffett Stocks to Buy and Hold for the Long Haul

Berkshire Hathaway's portfolio highlights strong Q3 performance from American Express (AXP), which reported 11% revenue growth and 19% EPS growth, fueled by its premium credit card segment and share repurchases, with 2025 EPS projected to grow 14-16%. Concurrently, Ally Financial (ALLY), a newer Berkshire holding, is demonstrating a recovery with an expanded net interest margin of 3.5% and robust deposit growth, despite past interest rate headwinds, presenting an attractive valuation with a forward P/E of 7 and a ~3% dividend yield. These holdings underscore Berkshire's long-term conviction in established financial services and recovering niche banking sectors.

Analysis

American Express (AXP) delivered robust Q3 results, with revenue growing 11% year-over-year, driven by 18% credit card fees and 12% net interest income. Earnings per share (EPS) surged 19% YoY, benefiting from operating leverage and consistent share repurchases. The company added 3.2 million new cards, solidifying its premium travel and entertainment segment dominance.

AXP management projects strong 14%-16% EPS growth for the full year 2025, supported by its ability to consistently add high-fee cards and ongoing capital returns. Berkshire Hathaway's significant, over 20% stake highlights confidence in AXP's enduring business model and profitability.

Ally Financial (ALLY), a newer Berkshire holding, shows recovery, expanding its net interest margin (NIM) to 3.5% in the latest quarter as older, lower-rate loans mature. The online bank boasts 3.4 million deposit customers and $142 billion in consumer deposits, primarily funding $11.7 billion in Q3 car loan originations.

ALLY's cost-efficient model attracts deposits, supporting future loan growth. With a forward P/E of 7 and a dividend yield near 3%, alongside historical stock repurchases, ALLY presents an attractive valuation. This suggests a potential EPS rebound over the next few years, aligning with Berkshire's investment thesis.

Key Decisions for Investors

• Investors should evaluate American Express (AXP) for its consistent double-digit EPS growth projections, robust capital return program, and entrenched position in the premium credit card segment, suitable for long-term portfolio allocation.
• Consider Ally Financial (ALLY) for its compelling valuation (forward P/E of 7, ~3% dividend yield) and improving profitability, evidenced by an expanding net interest margin, as a potential recovery play in the online banking sector.
• Monitor AXP's continued premium card acquisition and share repurchase efficacy, while for ALLY, track the sustained improvement in net interest margin and asset quality as its loan portfolio matures.