1 Stock to Buy Hand Over Fist in the Tariff-Induced Market Downturn

Brett Schafer, The Motley Fool

Sat, Apr 12, 2025, 1:23 AM 5 min read

In conscionable a fewer abbreviated weeks, the caller statesmanlike medication successful the United States has upended planetary fiscal markets done an assertive tariffing strategy against countries similar China. As of this writing, the S&P 500 is successful a 19% drawdown and adjacent to triggering an authoritative carnivore market.

Many stocks are overmuch lower, specified arsenic American Express (NYSE: AXP). The recognition paper and banking elephantine is down 29% from highs, taking it connected the chin successful the past fewer weeks. While 2025 whitethorn beryllium a pugnacious twelvemonth for astir each concern if these tariffs persist, this short-term reasoning from Wall Street is providing a invaluable buying accidental successful American Express for investors who program to clasp for a decennary oregon longer.

Here's wherefore American Express is simply a banal I'd bargain manus implicit fist successful this marketplace downturn.

American Express is 1 of the largest recognition paper issuers successful the United States, with an estimated 146.5 cardinal cards successful circulation astatine the extremity of 2024. Typically, recognition paper lenders are pro-cyclical, meaning they bash good financially during the bully times. However, successful an economical recession, nonaccomplishment rates connected loans tin commencement to emergence and sharply interaction sector-level earnings. Investors are apt disquieted astir a imaginable recession impacting the company's net successful 2025.

Two characteristics marque American Express antithetic than different recognition paper lenders and possibly misunderstood by Wall Street. First, astir of its gross does not travel from nett involvement income connected recognition paper loans. In 2024, 66% of American Express' gross came from recognition paper swipe fees and fees charged to customers to usage the cards. Unlike different recognition paper issuers, American Express has its ain payments web akin to Visa and Mastercard, making its gross much diversified.

Second, American Express caters to a much affluent and wealthier lawsuit basal that volition bash amended than mean during an economical downturn. In 2024, the mean spending per paper subordinate was $25,000, with write-off rates connected loans beneath 2% successful Q4 of 2024. These are superb metrics compared to the competition, which should springiness American Express a limb up successful a recession if 1 materializes.

One of the astir underrated parts of a stock's instrumentality volition travel from management's quality to intelligently instrumentality superior to shareholders done stock repurchases oregon dividends. American Express is 1 of the champion successful the satellite astatine consistently returning capital.

Over the past 10 years, the stock's dividend is up 110% with accordant year-over-year increases. It presently has a output of conscionable 1.26%, but this is simply a fig that should turn implicit the agelong term. However, stock repurchases are wherever the bulk of superior returns are going. The institution spent $5.4 cardinal connected repurchases successful 2024. Shares outstanding person fallen by 21% successful the past 10 years, which helps boost the ownership stakes for remaining shareholders arsenic good arsenic dividend per stock maturation and net per stock (EPS) growth.