Opinions
Gordon Reid
Visa Inc.
V-N
COMMENT
Jan 30, 2018
Stock price when the opinion was issued
You might be interested:
He owns Visa and owned MA a long time ago. Both are great, but he prefers Visa. Visa trades slightly cheaper in terms of valuation, and is much larger than Mastercard (Visa is bigger than all competitors combined). MA is more internationally active. Visa has a higher percentage of debit cards, which grows faster than credit cards. Visa competes well in terms of growth rates with MA, yet trades at a lower multiple, so cheaper. He likes that the debit card business is growing faster than credit cards.
See his other comments today. Is a juggernaut. Will benefit from higher inflation, because they are paid on transaction volumes, which have not declined. There's great growth in Europe, Latin America, Africa and Canada, though it's subdued in the U.S. P
(Analysts’ price target is $387.33)Average rate of return of 20% since it went public. Does take pauses, and it looks to be taking one right now. The drop looks a bit concerning, though still in a normal trading range. If it can hold above the $330 level, it's worthy of buying on this dip. Something bad happened yesterday to cause the almost 5% drop.
But you have to be very careful. You need a trading plan, which means that if it drops below $330, you sell. Solid support at $315.
97% gross margins, and 60% operating margins. A play on global transaction volumes. Worries about stablecoins; but however people decide to pay for something, Visa will take its share. There will always be competitive threats, but its network is a backbone of payments and can't easily be replicated. Yield is 0.68%.
(Analysts’ price target is $387.33)Largest payment processor in the world. Still lots of growth potential outside NA for transitioning from cash to digital. Value-added services, such as cybersecurity, are now almost 25% of revenue base. Robust network. Don't discount them because of stablecoin, will be actively involved.
Having taken most of my money out, how do I know when to sell my last bit, or do I keep hanging on forever as I’m just playing with the house money? This is really the core of investment management. It's a question every investor and investment manager has to understand, come to terms with, and create a disciplined approach to the answer. You have to have a rule-based investment philosophy to allow long-term success. It's not "house money", it's your money. You should think of your profits, not in terms of the relationship with a cost of your investment, but just in absolute terms. It's your money. It doesn't have any less value because you've earned it in the market. Also you shouldn't just be holding on because it is "winning". You have to always be looking at the company in terms of how is it trading today relative to its past, and what might happen in the future. You have to judge a company every day, asking yourself if it is something you would buy today.