Stockchase Opinions

Cameron Webster Visa Inc. V-N BUY ON WEAKNESS May 08, 2008

2 marquee stocks that he is watching right now are Visa (V-N) and MasterCard (MA-N). They have no credit risk. They are transactional-based businesses. The multiples in terms of earnings are a bit rich. Wait for a pullback. If you want global growth, MasterCard would be the better.
$87.300

Stock price when the opinion was issued

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PAST TOP PICK
(A Top Pick Jul 17/24, Up 32%)

It still holds a dominant position in world global payments and is still a long term hold with good execution. It trades at a bit of a premium.

BUY
Visa vs. Mastercard

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.

TOP PICK

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)
WEAK BUY
The US Senate just approved stablecoin

Yes, stablecoin has been weighing on Visa, but he thinks also the Middle East fighting between Iran and Israel. Airlines cancelled flights, so there was concern over credit card spending. Is down 3% today. He target $365.

PAST TOP PICK
(A Top Pick Jun 18/24, Up 25%)

Such a well-oiled machine. Dip in the chart lately. Massive amount of free cashflow, dominant position. Crucial role in move to digital payments. Still likes very much, though it's now a hold because it's above his buy price.

WATCH

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.

BUY

Many times people have challenged or sold Visa, and every time they were wrong. They will be wrong again.

HOLD

Is consolidating, just like the S&P these days. Nothing wrong with consolidating, as long as it doesn't break down. Visa's chart looks fine.

TOP PICK

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)
HOLD

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.