Opinions
Bruce Tatters
Visa Inc.
V-N
COMMENT
Jan 10, 2017
Stock price when the opinion was issued
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Very good performer, but always attracts a very high premium multiple. Seen as part of an oligopoly in the payments space. If there's a downtick in the economy, price and/or volume of goods would come down; there would be less "traffic" on the Visa toll road. In a recession, rather than people putting all purchases on plastic, they tend to be more cautious and spend less overall. So, potentially lower earnings.
Brand is fantastic, with very high ROIC. If it ever got cheap enough, he'd consider it.
Undisputed champ, leaving fintech and MA in the dust. Gives you exposure to the financial sector. Outperforming the S&P financial sector by ~10%. Q1 saw 8% transaction growth. Cautious consumer spending could be a potential risk, though US consumer remains strong. E-commerce and travel spending could push volumes higher in 2025-26.
It's a hold for her, not in a rush to add more.
Reliable name. Vast network, trusted brand, unmatched scale. Move from cash to digital payments. Consumer spending remains pretty solid in US. Cross-border transactions remain strong. Pretty capital light, which means very strong free cashflows. About 13% annual growth rate, paying a slight premium for the name.
Recently bounced off 200-day MA very nicely, so it's a pretty good technical setup going forward. Yield is 0.68%.
Best years of growth are probably behind it. Buybacks and dividend increases. Really tied to consumption, whether institutional or consumer. Good brand, good story. Transition from cash to digital will continue -- premier opportunity in that space. He's overweight, and probably won't trim just yet.
A name you buy whenever you get the opportunity; long term, you'll make money. He's not a huge fan of the market at these levels.
Both great, both enjoying growth ahead with much of the world still to adopt cashless payment. MA has seen a little higher growth, but both have good growth and both enjoy 97% gross margins and 67% operating margins. They got knocked about occasionally over fears of regulation. Prefers Visa slightly over its valuation discount. Good to buy either.
Visa and MasterCard (MA-N) have been terrific performers over the last few years. There was so much regulation in other parts of financial services, there was no earnings growth, other than a few names. These 2 were getting all of money and valuations kept getting pushed. On earnings valuation, they are in the mid-20s. They’ve actually come down, because they continue to grow and the stocks flattened out a little. When the other parts of financial services, US banks, US brokerage firms start to do better, money will come out of these high flyers. He prefers things like Bank of America (BAC-N), Goldman Sachs (GS-N), Morgan Stanley (MS-N) which are probably going to have similar, if not better earnings growth over the next couple of years.