Investors have underrated American Express (NYSE: AXP) for years. Competing payment networks and Mastercard dominate the payments discussion and trade at premium valuations. And yet, over the past five years, American Express stock is actually outperforming both Visa and Mastercard. I bet few people would assume this was the case.

Less than two weeks ago, American Express hit an all-time high after posting strong earnings yet again for the second quarter. The stock is down roughly 6% since then, but it is still up more than 100% in the last five years. Here's my prediction for what comes next for American Express stock and whether the stock is a buy right now.

American Express runs a vertically integrated credit card business. It not only operates as a payment network, it also issues credit cards to customers, targeting wealthier people with high spending power. These high-fee cards drive revenue and insulate American Express from recessionary periods. During a weak economy, wealthier people are more likely to keep up their spending than others. It is that simple.

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Source Fool.com