Over the past four decades, Berkshire Hathaway has achieved a remarkable 40,000% growth in shareholder capital, largely under the guidance of Warren Buffett. Among Berkshire's portfolio, American Express stands out as a significant holding, representing nearly 14% of its investments. Recently, American Express stock has experienced a notable decline due to concerns about tariffs affecting spending habits. However, this dip could present an excellent opportunity for investors aiming for substantial returns over the next half-decade.

American Express aligns closely with Buffett’s investment philosophy, which prioritizes quality companies over bargain-priced ones. One hallmark of such enterprises is their economic moat, a competitive advantage that sustains long-term success. For Amex, this edge stems from two key areas. First, its brand commands premium status within the credit card industry, allowing it to charge higher annual fees and attract consumers with robust spending power. This strategy not only enhances revenue but also reduces risks associated with delinquent payments compared to competitors. Second, Amex operates as a dual-platform business connecting merchants and individuals, fostering a network effect that amplifies value for both parties.

While American Express does not promise explosive growth, it consistently delivers steady gains driven by increasing consumer spending and expanding demographics. Over the last five years, revenues have grown at an annual rate of 8.7%, with diluted earnings per share rising by 11.9%. The company excels in returning capital to shareholders via buybacks and dividends, further boosting investor returns. Analysts predict an annualized earnings growth of 14.5% over the next three years, suggesting strong potential through the decade.

Currently, the valuation of American Express appears particularly appealing. Shares have dropped 24% from their peak, reducing the forward P/E ratio to approximately 16 times earnings. If this multiple climbs to 20 by 2030, it could offer a 25% increase in stock price. Even if the valuation remains constant, the anticipated doubling of earnings per share over the next five years should result in a 100% gain. In today’s volatile market, purchasing American Express shares presents a solid investment opportunity worthy of consideration.

Investors seeking stability and growth amidst market turbulence may find American Express an ideal choice. Its proven track record, coupled with current undervaluation, positions it as a promising asset for those looking to enhance their portfolios over the medium to long term.