Opinions
Bill Carrigan
Visa Inc.
V-N
COMMENT
Jun 10, 2016
Stock price when the opinion was issued
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Global leader, few competitors. Stock's come down to 200-day MA, which is always a good time to dip back in (and he did). He's held this name since 2016, adding when down and trimming when frothy. Revenue for 2026 expected to exceed $44B. Really consistent, very steady growth. Around 13-15% compounded earnings growth ahead. Yield is 0.71%.
(Analysts’ price target is $395.70)She still sees upside and it is one of the best known players in global payments. It has double digit revenue growth and its value added services contribute to more than a quarter of its revenue. Still has high margins. Returned $6 billion to shareholders in buybacks and dividends last year. Has strong fundamentals.
Though he's not a fundamental analyst, he can offer a small insight into the credit industry. There's been a lot of talk that's there's probably going to be some reason for the Fed to ease, and that's because the economy is probably slowing down. Purchases will be down, so Visa and the like will suffer.
That's probably why it's stopped moving up to the same degree as the S&P 500. Looking at the chart, you can see the consolidation pattern; as long as the pattern doesn't break, you're OK. Don't assume anything. If it breaks to the upside, you want to be a longer-term owner. But it could also break to the downside, possibly for the fundamental reason mentioned above. So you need to be cautious on this one. The consolidation could be a warning sign.
Great business, growing secularly. Dominant position in a tight oligopoly. Domestic (40%) and overseas (60%). Expects earnings to continue to compound at ~12-14% pace over coming several years. Competitive moat means not likely to be disrupted.
Has pulled back about 8%, while equity market is making new highs. One to buy the dip. At ~27x PE, trades at small discount to MA right now. MA is growing faster, around 15%. But trades at 32-33x PE.
He'd be fine with buying either one or both for the very long term.
Chart shows a long upward trend channel and it should work higher. There is no sign this is going to go down. Feels the stock wants to go higher. However, if your portfolio is loaded with consumer sensitive stocks, then you have to lighten up. Consumers type stocks have gone too far and too fast. He would prefer to be underweight consumer stocks, and would lighten up.