Warren Buffett will step down as CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) by the end of this year, and many investors are likely wondering whether his successor, Greg Abel, can maintain the growth rates of this conglomerate's closely watched stock portfolio.
Abel, the CEO of Berkshire Hathaway Energy, has been with the company for 25 years, but he isn't a celebrated stock picker. He probably won't stray too far from Buffett's playbook of investing in undervalued and cash-rich businesses with wide moats, but he may also miss some big opportunities.
So, instead of focusing on what Abel might or might not invest in, let's look back at two of Buffett's long-term plays on the financial sector: American Express (AXP -0.43%) and Visa (V 0.88%). Buffett didn't sell either of these stocks as he trimmed his positions in Apple, Bank of America, and his other top holdings to raise more cash over the past year.
Let's see whether either one of these resilient stocks is still worth buying in this volatile market.

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When did Buffett invest in American Express and Visa?
Warren Buffett initially invested in American Express in 1964, but he didn't significantly boost Berkshire's stake in the financial services giant until 1991. Today, Berkshire owns 21.6% of the company through its 151.6 million shares, worth roughly $44.4 billion. That accounts for 15.9% of Berkshire's portfolio, making it its second-largest position after Apple.
Buffett started accumulating shares of Visa in 2011, three years after its public debut. It now owns 8.3 million shares, which are worth about $3 billion and give it a 0.4% stake in the company. That position accounts for 1.1% of Berkshire's portfolio and ranks much lower as its 17th-largest holding.
What are the differences between American Express and Visa?
American Express and Visa are typically known as credit card companies, but they operate under different business models. American Express is a bank that issues its own cards, handles its own accounts, and operates its own payment processing network. Visa isn't a bank and doesn't issue any of its own cards. It only partners with banks and other financial institutions to issue co-branded cards that are compatible with its payment processing network.
American Express has fewer cardholders than Visa because it approves its cards only for lower-risk, higher-income customers. Visa has a much broader reach because it issues its cards through over 14,500 financial institutions worldwide. Those partners, who are responsible for the debt, may approve their cards for riskier and lower-income customers.
Visa generates most of its revenue by charging its merchants "swipe fees" (usually 2%-3% of the transaction amount). American Express also charges similar swipe fees, but it generates a lot of its revenue from its interest payments and annual fees.
Visa and American Express are both sensitive to higher interest rates, which curb consumer spending. However, higher rates will also boost American Express's net interest income on its credit card loans to offset some of the pressure from slower consumer spending. Its focus on more affluent customers should also insulate it from protracted economic downturns. Visa doesn't have those safety nets because it's not a bank, but its global diversification could protect it from regional recessions.
American Express, Visa, and Mastercard all face constant pressure from individual businesses, merchant groups, and government regulators to reduce their swipe fees. However, Visa and Mastercard (which operates a similar business model to Visa) are arguably bigger targets because they control much bigger slices of the global credit card market than American Express.
Which stock is a better value right now?
From 2024 to 2027, analysts expect American Express and Visa to both grow their earnings per share (EPS) at a compound annual growth rate (CAGR) of about 13%. However, American Express stock only trades at 19 times this year's earnings and pays a forward yield of 1.1%. Visa stock appears a lot pricier at 34 times forward earnings and pays a lower forward yield of 0.7%.
Both stocks still look like evergreen investments. But if I had to pick one over the other, I'd pick American Express because its business is more resistant to interest rate swings, faces less antitrust pressure, and looks cheaper relative to its growth potential. That's probably why Berkshire still owns significantly more shares of American Express than it does of Visa.