Visa Inc. (V)

Record holiday spend and amazing free cash flow and a clean balance sheet.

Toll booth payment every time someone uses their Visa card. Bank takes on the credit risk, not Visa. Incredible network. An amazing 64k transactions per second. Ton of people around the world still use cash, so huge secular growth potential. B2B business has great growth. 

Stablecoin and so on are not threats because Visa's involved in all the new technology. 80% gross margins. Yield is 0.76%.

It's been a successful year for Visa the company, but Visa the stock not so much. One reason is that investors are unsure what will happen to economy--will there be a recession and will unemployment spike? The PE has shrunk from low-30s to 26-27x. The fundamental march on, but not the share price. Visa is much larger than Mastercard, trades at a lower multiple and Visa's debit card business is more entrenched. Visa remains the leader. 

He owns Mastercard but both are similar although MC grows a little faster. Revenue growth is doing better at 10 to 12%. This is because of cross border transactions and e-commerce. Although the valuation is a little high you can pick away at it for a long term hold.

Downtrend due to there being a lot of other consumer credit companies that are better on the digital side. They will transition, and he's watching for them to get more digitalized. They're trying, and they do have some offerings. 

Struggling with integrating AI, as is Mastercard. They've implemented it for the betterment of their own business model, but they haven't yet done it for the customer's experience.

Debit will effect them, and this deal is complex. He always says that Visa is a toll booth, charging money whenever a customer uses a card, without Visa taking any risk. Also, there are so many points systems tied in with credit cards, so people prefer credit to debit cards. So, the impact of debit is limited. And Visa is a global player which could grow in cash-using countries. Great cash flow and margins.

Nice run in 2024, now basing. Sub-prime lenders are showing that the consumer is in trouble, and the big US student loan company is seeing more defaults. So Visa will be getting people defaulting on payments, pressure from a softer economy. 

Good news is that it does seem to be holding support quite nicely. Gets a 5/10. Nothing wrong with the chart, just not exciting.

Long term, very positive outlook. Still some growth to go from cash/cheques to digital payments. Cross-border volume and travel has held up pretty well. High-end consumer continues to travel and buy. Bit of weakness with lower-end consumer. Seeing transition to people using cards for everyday items, not just big-ticket ones, and that provides steady volumes.

Adding services such as cybersecurity, a growth area. Pullbacks like today are good entry points.

This year, there have been fears of stablecoins and cryptos displacing both Visa and Mastercard  However, both companies are too entrenched with merchants and customers to displace. There are few incentives for consumers to adopt stablecoin. He continues to buy it.

No better credential network to support alternative networks such as stablecoin. So there are risks, but also opportunities. Stock's being left behind as so much $$ goes to the AI trade. One of the most durable companies in the S&P.

Hasn't trimmed. In a portfolio, not all stocks move at the same time. Some take leadership, while others take a breather. Visa's been successful at gaining market share, inflation also helps. Trades just south of 30x PE, and analysts give it 13% growth. A stable hold.

Likes the long-term secular growth. 50% of world's transactions are still in cash. Seeing more cross-border transactions and leisure travel. Few competitors. Underperformed S&P since April, but still OK. Lots of $$ is chasing tech, but this name's up 27% last 12 months. 28x PE for 13-15% growth, a bit of a premium. Still likes.

Has done so well, he took some money off the table as part of good risk management. Long-term chart's performed very well. The kind of name you want in your portfolio. Continues to perform.

Drifting sideways between $325-375 since beginning of this year. Range-bound, not clear if it wants to go up or down. Consumer spending has been resilient, but he's keeping an eye on it. What happens with consumer spending is critical to this name.

To succeed, you have to do the underlying, to sell it at your level, or else you will buy it back at a higher price. A Canadian writing a covered call on a US stock that income treatment is a capital gain, which is good.