Amex

Source: taxrebate.org.uk via flickr

American Express (NYSE:AXP) hasn't exactly had the best year so far. In the wake of the announcement that Costco plans to drop American Express as the only credit card accepted at its warehouse clubs and a fairly significant legal decision that went against the company, shares plunged throughout the first quarter of 2015. Even after a recent rebound, American Express is still down 13% year to date. However, there are several reasons to believe in American Express for the long run.

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The best at recruiting affluent cardholders
Ever since issuing its first charge card, American Express has been a master at creating "premium" credit card products, and recruiting the most affluent customers. In fact, the affluent and desirable customer base is a big reason why American Express can charge merchants higher swipe fees than Visa or MasterCard.

American Express issued its first charge card (which would later become the "green" card) in 1958, with an annual fee of $6-$1 more than Diners Club, its biggest rival at the time. American Express wanted to brand itself from the start as a premium credit card brand.

Amex Platinum

Eight years later in 1966, American Express introduced its Gold card, which boasted a higher level of customer service, as well as the prestige that came with being a member of the "club." The exclusive club concept caught on, and in 1984 the company began issuing the Platinum card -- originally available by invitation only to only the most highly regarded Amex customers.

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More recently, American Express rolled out the Centurion card, more commonly known as the "black card," in 1999. The card has been brilliantly marketed -- mainly relying on word of mouth -- and has become somewhat of a legend. Other companies have tried, such as with the Visa Black Card, but no card has managed to come close to the level of prestige and recognition of the Centurion.

Competition between credit card issuers has intensified in recent years, and I'd be willing to bet that Amex's line of charge cards will continue to evolve in an attempt to court the most affluent clientele. This is something that American Express does unquestionably better than its rivals, and I don't see that changing anytime soon.

Products and perks you can't get anywhere else
American Express not only strives to offer the best products and perks to its customers, but it understands the power of offering things that aren't available through any other company.

For example, virtually all of the credit card issuers that offer co-branded cards with the major airlines (Amex included) offer some type of free or reduced-price airport lounge access. So, to make sure the high-end traveler segment of the market wants Amex cards in their wallets, American Express decided to do something better by creating its own Centurion lounges -- exclusively for its cardholders.

Centurion Lounge

American Express gives its customers access to the best places in the airport to wait for a flight. Photo: Flickr user Mighty Travels

The Centurion Lounges are in six airports so far, and have consistently been reviewed as the best and most luxurious airport lounges by many top travel sites. Access is free for Centurion and Platinum cardholders, and other Amex customers can get in for $50.

The unique benefits don't stop there. Many of American Express' charge and credit card products offer benefits that are superior to the competition's offerings. For example, there are no airline co-branded cards that offer the same ability to earn elite status as the Platinum and Reserve Delta American Express cards.

Also, there is no other credit card issuer with a line of business and corporate cards with the vast amount of choices as American Express'. In fact, a visit to the company's website reveals 12 small business and six corporate card choices. There is simply no match for Amex's business offerings.

A diverse line of products that are the best in the market
American Express' core charge and credit card business is arguably the best in the market, but the company has also successfully branched out into other areas of payments.

For starters, the company's recently introduced Plenti reward program is the first of its kind, and seems to be a success so far. Abeer Bhatia, Amex's chief executive of U.S. loyalty recently said that the program's performance so far has exceeded the company's expectations.

Although American Express is traditionally known as a "premium" brand, the company has done an excellent job of moving into the other end of the market as well. Its prepaid product, Serve, which is similar to products offered by Green Dot and Western Union, but at a much lower cost to consumers. The company can afford to pretty much give away the prepaid product to customers, and make its money from the transaction fees generated instead.

Amex Bluebird

Source: flickr user Mike Mozart

The Bluebird "checking account alternative" offers virtually all of the same features as bank checking accounts (including the ability to write actual checks) with no monthly fees, inactivity fees, or overdraft fees -- and without a credit check. In many ways, even if you have good credit, Bluebird looks superior to most traditional bank checking products.

The list goes on ...
The bottom line is that despite a few recent bumps in the road, American Express has been and will continue to be one of the most influential and innovative companies in the financial sector. For example, the company just recently announced that it would become the first corporate card network to add Apple Pay. And, the company is reinvesting substantial resources to ensure that its products remain cutting edge -- as evidenced by the recent enhancement to the Starwood co-branded credit card.

American Express is a long-term winner, and these reasons (among others) are why the company is one of Warren Buffett's biggest holdings. At its lowest price-to-book and P/E valuation in over two years, now may be an opportunity to get into this innovator at a discount.

Matthew Frankel owns shares of American Express. The Motley Fool recommends American Express, Apple, MasterCard, and Visa. The Motley Fool owns shares of Apple, MasterCard, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.