Visa Inc. (V)

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.

(A Top Pick Dec 16/15. Down 0.22%.) A really strong story with revenue growth in the high single/low double-digit. Margins are in the low 60% range. It has been a tough time for cyclicals until now, and we are beginning to see a lift.

(A Top Pick Nov 3/15. Up 2.7%.) The valuation is attractive. The big tailwind is that more and more companies are going to transactions that are not cash-based.

A good stock to own, but he doesn’t own it, because he prefers stocks that pay generous dividends. He doesn’t think it is going to be too far in the future where you are going to start seeing some of that cash returned in the form of a dividend.

With the US election of lower tax rates and the ability to repatriate profits from overseas, that would be a positive. He doesn’t see this or MasterCard (MC-N) slowing down anytime soon. There is a lot of growth inherently within both of these going forward. He would rather own Gemalto (GTO-NV), the company that provides the chip technology that they both use, which has also been hit with tough times.

This is really a consumer spending stock. If the US economy continues to strengthen and the European economy turns around, which he expects it to do, this company will continue to do well. The other story here is the charges. There has been pressure because of this.

This has done a fantastic job and is a great story on globalization and global spending. Trades at a very rich multiple. The company is subject to some technological disruption. It has the potential to reduce its costs through technology, but it is going to take investments up front to be able to stay on top of that. You have to be concerned that the major merger with Visa Europe, and the European community is being very aggressive in terms of the interchange fees that these card processor companies are able to charge. He is worried that as governments become more populous, Visa has some real vulnerability in terms of fee revenue it is going to be able to earn. With the stock trading at 32X earnings, he would be very cautious.

Historically, financial service stocks tend to do very well at this time of year, from mid-October to around the end of January. This recently broke through to a new high and is in gear again.