Visa Inc. (V)

V-N vs. MA-N. He thinks V-N is the best company and owns it. It has a better foot hold in the debit card space. They process $1.9 trillion in transactions each year. Debit is becoming the favoured plastic now. Expect 20% growth rate in earnings. Card penetration in Europe is only about 25% vs. 35% in North America.

Trading around 25X earnings this year, and 21X next year’s earnings. Not cheap, but has a huge runway of opportunity ahead of it with the conversion of cash to electronic currency, as well as international markets. A great growth company. You can still buy it comfortably over the next 3-5 years. Dividend yield of .8%.

Operates the largest global payment network, and will continue to benefit from online retail commerce, the whole transition into digital online payments. Cash still represents 85% of total payments globally, so there is still a lot of growth going forward. Recently acquired Visa Europe, and as they integrate that, that is going to contribute to earnings this year. Dividend yield of 0.81%. (Analysts’ price target is $94.28.)

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.

Still buying this for clients. The acquisition of Visa Europe was a brilliant acquisition. Their North American margins are 60% and Europeans are 30%, and are not going to stay at 30% for long. Visa is going to improve those margins, and you are going to see a robust earnings growth. The runway is just massive for them. People are still using cash, and we are heading towards a cashless society. Not cheap, but it is never going to be cheap.

(Top Pick Dec 15/15, Up 0.59%) This has legs. 1.9 trillion transactions is amazing. It takes no credit risk. It is a transaction company. Europe is less reliant on plastic than North America. There is some runway in front of them. It grows at about 20% a year. The yield is a bit low but it is really about total return.

He also owns money centre banks and they have done well. This is more of a technology company. They get paid on transactions occurring. Credit card transactions should increase with lowering tax rates in the US. Use of credit cards should still increase also. (Analysts' Target: $93.84)

A growth play, and depends on what kind of discretionary spending people will have. Rising rates is going to put a bit of a damper on people are spending more. There is still lots of growth in store for them. This is not the greatest entry point, so he would suggest you buy half a position today and see what happens in the new year. (See Top Picks.)

(A Top Pick Jan 12/16. Up 7.14%.) This has lagged in this rally, probably because it is not the traditional financial institution. It is really a play on the secular growth of online/digital payment. Currently 85% of all payment transactions are still cash. The emerging-market is over 90% and developed market is under 60%, so there are still a lot of opportunities.

The dividend is under 1%, so this is not a Buy for him, as it is less than what he is required to have. There is a move towards less cash and paper, and more plastic. In the West, penetration rates are significantly higher than in the emerging market countries, and even in Europe. There is still lots of growth potential. This trades in the mid-20s PE, but this is a growth name and has traded above 20 for a long time. If you are waiting for it to get cheap, it is probably not going to happen. If you are looking for some real growth and have a 3 to 5 year time horizon, this makes sense.

A global, leading company with a dominant position. Has done extremely well over the last 5 years. It has somewhat flat lined in the last year. A great long-term, really big free cash flow generator that does really well. The multiple might be a little too expensive. Wait for some type of disruption.

Trading at about 30% above FMV. A lot of stuff that was working in the Obama market, looks as though it is unwinding in the Trump market. All those stocks got very, very expensive in what was essentially a monetary market, and may now be switching around. This is not cheap.

(Market Call Minute.) Great, long term growth story. Probably a good one to buy on any type of material pullback.

He prefers this over MasterCard (MC-N). They just purchased a major stake in Visa Europe, which gives them a big opportunity. Europeans spend $0.37 of every dollar in cash. In North America, it is $0.25. They are growing very, very well at about 20% annually, 1.9 billion transactions per year.

One of the things he thinks is very important is that although it is a credit card, they take no credit risks. It’s basically a toll booth. They are very global and continue to grow their company internationally. A great story and thinks it will continue to do well. There is a huge part of the world that does not use credit cards, so there is great growth on the emerging-market side.