Summary
- I own shares in all three major credit card companies. Viewing their valuation however, only one of them is even close to appealing today.
- That company is American Express - I use this article to establish my thesis on the company and show you why I consider the company a good investment.
- American Express is a "BUY" in today's market.
I own stock in all three major credit companies, Visa (V), Mastercard (MA), and American Express (AXP). I view all of them as investable businesses for the right price, but unfortunately, these businesses are really only investable when the price is somewhere close to appealing, or at the very least what one might consider fairly valued.
So when I looked at American Express, I figured it was time to solidify my overall stance on the company with a solid article explaining my rationale and explaining the company as a whole. This is especially true because compared to the other major credit card companies, AXP is actually rather underfollowed.
This article aims to do just that - explaining - and show you why I'm willing to pay today's price for AXP.
American Express - What does the company do?
The American Express company, or Amex, is one of the oldest financial companies in existence and can trace its roots back to its founding back in 1850, over 170 years ago. It's a member of the Dow Jones, and it's most well-known for its charge card, credit card, and related businesses, including things like traveler's checks and the like.
The company is by many, including Forbes, considered to be one of the most valuable brands in the world, and as of 2019, has a market share (in the US) of close to 11.3%. While not as large as competitor Visa and from certain respects could be said to be embattled in terms of market share, it nonetheless holds a very impressive business.
How impressive?
As of FY19, the company had around 114.4M cards in force, with around 54.7M cards in the US alone. The average annual spending on an AMEX was nearly $20,000, and this includes consumer cards, small business and corporate cards from AMEX.
