Almost 17% of Berkshire Hathaway's $328 Billion Portfolio Is Invested in 1 Top Stock That's Up 180% in 5 Years
Key Points
American Express, with its widely known brand name, sits in a favorable industry position.
In the long run, durable revenue and profit growth have been driven by economic expansion.
However, more cautious investors might eschew the credit card giant's current valuation.
- 10 stocks we like better than American Express ›
Berkshire Hathaway owns many different public equities, which combined make up its $328 billion portfolio. Among them, there's one standout business whose shares have performed particularly well recently. As of Feb. 9, this financial stock's price is up 180% in the past five years. By including the dividend, that figure is even higher at 198%.
Here's what investors need to know about American Express (NYSE: AXP), which has been a pillar in the Oracle of Omaha's portfolio.
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It's not this consumer tech giant
Apple has been the single biggest position for the conglomerate for a long time. But after numerous share sales in the tech giant's shares over the past several quarters, the road has cleared for another industry-leading business to rise up the ranks.
Berkshire owns 22.1% of the outstanding shares of American Express. That stake has gradually increased, now making up 16.5% of the portfolio. That's because the payments enterprise continues to buy back its stock, which benefits the conglomerate with greater ownership.
Coming away impressed by American Express
If a business makes it into Berkshire's portfolio, you can be sure that Buffett and his team view that company highly. It's easy to come away impressed by American Express.
Fitting one of Buffett's favorite qualities, Amex possesses a strong brand within the credit card industry. The business offers premium cards that exude luxury and status. They carry high annual fees, but come with a laundry list of perks, rewards, and benefits. This is valuable to affluent customers, whose spending power directly leads to the company's financial success.
American Express has a history of raising its annual fees, indicating pricing power. The average fee per card increased 75% from 2020 to 2025. Delinquency and charge-off rates are also lower than the industry average.
Another fantastic quality is the company's durable growth. As the economy steadily expands over time, more spending is happening. This provides a notable tailwind. Amex is also propelled by the rising penetration of cashless transactions.
Revenue (net of interest expense) climbed 120% in the past 10 years. Diluted earnings per share during that time were up by 205%. The leadership team set a goal of achieving 10% and mid-teens growth, respectively, for the top and bottom lines over the long term.
Are you willing to pay up for quality?
The stock's rise has contributed to what appears to be an expensive valuation. Shares currently trade at a price-to-earnings ratio of 23.3. This multiple has expanded by 124% over the past decade. Rational investors will wait for a better entry point.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
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American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
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