Can This Top Warren Buffett Stock Become a Trillion-Dollar Company by 2050?

Motley Fool04-29

It's not unreasonable for investors to expect this leading financial firm to get to a $1 trillion market cap. The brand’s premium status, as well as growth trends, are key factors that ...

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by 2050?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-29 19:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/04/29/top-warren-buffett-stock-trillion-dollar-2050/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It's not unreasonable for investors to expect this leading financial firm to get to a $1 trillion market cap. \n\n\n\n\n\n\n\nThe brand’s premium status, as well as growth trends, are key factors that ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/04/29/top-warren-buffett-stock-trillion-dollar-2050/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0011850046.USD","symbol_name":"贝莱德全球长线股票 A2 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The credit card giant pleased investors with its latest financial results, helping drive shares 24% higher this year (as of April 22).I don't doubt that this top financial stock's bullish supporters, including Buffett, would be happy if the business saw its market cap reach $1 trillion one day. This exclusive club only has seven members today, a group that's mostly dominated by tech firms.Can American Express hit the 13-figure valuation by 2050?The math makes senseAs of this writing, the financial services company carries a market capitalization of $173 billion. For American Express to get to $1 trillion, its valuation would need to rise at a 7% compound annual growth rate. To be clear, I don't think this target is unreasonable at all. It implies that the market cap will expand by 478% in the next 26 years.Past results don't guarantee future returns. However, let's look at history to provide some context.In just the last 15 years, American Express's market cap soared 655%. As we look ahead, the pace of growth will probably decelerate. But given that we have 26 years between now and 2050, if we look at things purely based on the math, it's not out of the question that Amex can get a seat at the $1 trillion table.It's all about durabilityOf course, a lot of things can happen in the future. Investors must have conviction that American Express will actually be around in two or three decades. Because American Express has been around for more than a century, I have confidence that it isn't going away. That durability is key, especially if you're interested in finding long-term holdings.We can quickly point to some major strengths that protect American Express' competitive positioning.For starters, there might be no stronger brand in the financial services sector. Amex carries a premium image in the minds of its existing and prospective customer base. And this attracts card members of higher credit quality and who have greater spending ability. This helps explain why Amex typically reports lower charge-off rates than rivals such as Bank of America and Citigroup.We must also think about growth potential. American Express isn't struggling in this department, as its revenue and diluted earnings per share jumped 11% and 39%, respectively, in the first quarter of 2024.Turning the perspective to the next few decades, there's a favorable backdrop that can continue lifting American Express to new heights. The ongoing prevalence of cashless transactions is a powerful secular trend to keep in mind.The company is also doing a fantastic job at bringing on younger consumers, as more than 60% of new card members in the first quarter were either millennials or Generation Z members. These people could be Amex customers for a long time, spending more as their incomes rise, which would lead to greater revenue and earnings for the company.The future is uncertainInvesting is all about looking at the facts in front of you and trying to assess the probability of a certain outcome happening. This is precisely how Warren Buffett operates, a strategy that has obviously worked out well for him and Berkshire Hathaway.Using this mental framework, I believe American Express has a good shot at achieving a $1 trillion market cap by 2050. You don't need to have overly optimistic assumptions to see this outcome become a reality. Moreover, the business possesses the competitive strengths necessary to be alive and well far into the future.Investors with a long enough time horizon should think about buying shares in American Express today.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2431830884"}