American Express Company (AXP): Among the Best Stocks to Buy Before Spring

As we approach the spring season, investors are looking for promising stocks that can deliver strong returns. One company that stands out is american express company (AXP), a globally integrated payments company with a rich history and a bright future. In this article, we will explore the factors that make american express an attractive investment choice and compare its valuation to historical averages and industry peers.

A Strong Track Record and Robust Financial Health

American Express has a long-standing reputation for excellence in the financial sector. Founded in 1850, the company has consistently demonstrated strong financial performance and a commitment to shareholder value. In 2024, American Express reported revenue of $60.76 billion, an increase of 9.30% compared to the previous year. Earnings also grew by 21.12% to $10.00 billion (Source: Finnhub).

The company's robust financial health is reflected in its dividend policy. American Express has a history of increasing its dividend, with a 17% increase disclosed in 2025. This demonstrates the company's commitment to returning value to shareholders and maintaining its status as a dividend aristocrat (Source: Kiplinger).

Growing Card Spending and Expansion into Digital Payment Systems

American Express is benefiting from increased spending on its cards, particularly among millennials and Gen Z. In 2024, card spending by these groups increased by 16%. This trend is driven by the growing preference for cashless and mobile payments, as well as the convenience and rewards offered by American Express cards (Source: PYMNTS).

In addition to its strong performance in the traditional card market, American Express has expanded its reach by joining the Alipay digital payment system in China. This partnership allows all global American Express card members to link their cards to the Alipay digital wallet, enabling payments at tens of millions of merchants across mainland China. This strategic expansion has opened up new revenue streams and increased the utility of American Express cards for its customers (Source: Reuters).

Analyst Ratings and Price Targets

The average analyst rating for American Express stock from 22 stock analysts is "Hold," with a 12-month stock price forecast of $291.75, which is a decrease of -3.06% from the latest price. However, some analysts have positive outlooks on the stock. For example, Donald Fandetti of Wells Fargo upgraded his price target to $370, representing a 22.94% upside (Source: Benzinga).

Comparing American Express' Valuation to Historical Averages and Industry Peers

To compare American Express' valuation to its historical averages and industry peers, we can look at the following data points:

1. Forward PE ratio: As of February 2025, American Express' forward PE ratio is 19.47. This is higher than its historical average forward PE ratio of around 14.70, which was the average for the fiscal year 2028. However, it is important to note that the forward PE ratio can vary depending on the time period and market conditions.
2. Dividend yield: American Express' dividend yield is around 1.75% as of February 2025. This is lower than the historical average dividend yield of around 2.5% for the company. However, it is still competitive with other financial institutions in the industry.
3. Price-to-book ratio: American Express' price-to-book ratio is around 12.5 as of February 2025. This is higher than the historical average price-to-book ratio of around 10.5 for the company. However, it is still within the range of other financial institutions in the industry.

In conclusion, American Express Company (AXP) is an attractive investment choice heading into spring due to its strong financial performance, growing card spending, and expansion into digital payment systems. While its valuation is higher than its historical averages in terms of forward PE ratio and price-to-book ratio, its dividend yield is still competitive with other financial institutions in the industry. American Express' commitment to shareholder value, strategic expansion, and robust financial health make it a strong contender in the financial sector. As always, investors should conduct their own research and consider their individual investment goals and risk tolerance before making any investment decisions.