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Written by Neil Patel for The Motley Fool
American Express trades at a price-to-earnings ratio of 18.6, a multiple that could expand in the future.
Management expects mid-teens earnings growth in the long run, noting the main catalyst that can drive shareholder returns.
Berkshire Hathaway owns dozens of stocks in its enormous $356 billion portfolio. But there is a notable concentration among a few names.
American Express (NYSE: AXP) is the conglomerate's second-biggest holding. Berkshire Hathaway owns 22.5% of its outstanding shares, currently valued at $46.3 billion.
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This top Warren Buffett stock trades 21% below its all-time high from December 2025 (as of Sept. 25). But it can double a $1,000 investment in five years. Here's how.
Valuation upside is the one driver of shareholder returns. This financial stock can be bought at a price-to-earnings (P/E) ratio of 18.6. This is 23% cheaper than at the start of 2026. In five years, it's not unreasonable to assume that the P/E multiple will expand to 20. This adds some upside to the outlook.
Of course, American Express needs to execute well, which it hasn't had an issue doing. This means that investors must also pay attention to profit gains, which are the other catalyst for shareholder returns. In January, management revealed a forecast that called for "mid-teens" earnings-per-share growth over the long term.
The combination of valuation expansion and strong profit growth at American Express could double the stock price over five years. There's a good chance that investors will see a starting sum of $1,000 grow to $2,000 between now and late 2031.
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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 American Express and Berkshire Hathaway. The Motley Fool has a disclosure policy.