The stock market is on a volatility roller coaster. After falling sharply in recent weeks, the S&P 500 index closed up over 10% on April 9 thanks to an announcement by the Trump administration about a pause on tariffs over the next 90 days for countries around the world (excluding China), a big walk back from just a few days ago. The next day, the market slid back down.
Who knows what will happen tomorrow, next week, or next month in regards to tariffs? As investors, this is out of our control. What we do control is taking advantage of any dips in the stock market and buying shares in companies on our watchlists that have gone on sale. If this stock market downturn continues, here are two stocks to buy for your portfolio and hold for the long haul.
NYSE: AXP
Key Data Points
American Express and affluent credit cards
American Express (AXP +1.75%) has been a mainstay brand for decades. With its high-fee cards with travel perks, cardholders stick around for years as customers, leading to steady revenue growth for the parent company. Unlike other credit card companies, American Express tailors its business to wealthier spenders and has a more diversified revenue base. Since it operates its own payments network, over half of American Express' revenue comes from credit card swipe fees.
In the last few years, the company has put up strong growth in acquiring new cardholders with its marketing strategy to Gen Z and millennial customers. 12.2 million and 13 million net new card acquisitions were made in 2023 and 2024, respectively. With average spend per cardmember close to $25,000 last year, each new customer acquisition is highly valuable for American Express, and with many of these new customers being younger people, their spending should only grow over time.
A recession may hurt American Express' earnings power in 2025. This is unavoidable for a company that makes consumer loans. However, I believe it's much better prepared to fend off a recession due to targeting an affluent customer base, which barely saw loss rates spike during the inflation scare of 2022.
Plus, American Express' management consistently grows its dividend payout and repurchases stock. This should help the shares do well over the long haul if you buy at a cheaper price during a market downturn. Over the long term, management believes it can grow revenue at 10% a year and earnings per share (EPS) at an even faster pace. If the stock gets cheap again, investors can make a rock solid bet by buying American Express stock and holding for the long haul.
V PE Ratio data by YCharts.
A take rate on global consumer spending
One of the other large credit card networks is Visa (V +0.61%), although it operates a slightly different business model than American Express. Visa does not issue any credit cards itself -- it simply operates as the payments network for banks that issue credit cards using the Visa network. This focus has allowed it to become a global giant in payment transactions, with 4.7 billion debit and credit cards in circulation at the end of last fiscal year.
Like American Express, Visa may see falling spending during a recession. But over the long term, it should grow along with inflation, global economic growth, and digital payments taking share from physical currency transactions. Last quarter, total payments volume grew 9% year over year in constant currency, with net revenue up 10% year over year due to add-on analytics services and pricing power.
Add on some share repurchases and profit margin expansion -- Visa has phenomenal 66% operating margins -- and Visa's EPS has grown 317% in the last 10 years. This is strong growth for a company of its size. I would expect similar growth over the next decade and beyond as well, perhaps even higher if inflation remains elevated. Why? Because Visa takes a cut of every transaction that flows through its network. If everything costs more, its revenue will rise, all else equal.
NYSE: V
Key Data Points
Today, Visa trades at an expensive trailing price-to-earnings ratio (P/E) of 33.5. This does not look like a good entry point right now. However, if the market downturn continues, investors may get a chance to buy this high-quality stock on the cheap. Keep it high on your watchlist in case it does.
