Visa Inc. (V)

This and MasterCard (MC-N) are the great duopolies of the world. Both have introduced their debit versions of their credit card franchises. Credit card transactions are on the rise. They recently acquired Visa Europe. If you have a 3-5 year horizon, this is a good purchase and it will give you a decent rate of return.

A great business in a very powerful longer-term secular trend. We are more and more of a cashless society. Valuation is not cheap. There may be some longer-term concerns, that as people find new ways to pay for things their dominant franchise could be at risk. Thinks the company will be able to find ways to play in other spaces as well, such as buying something like PayPal to get in the electronic payment mechanism. Any time there is a pullback would be a good time to buy this. A very good, long term business.

This and MasterCard (MA-N) trade in the mid-20 multiples and are growing nicely. His reticence is that they are priced as though they are going to stay really great financial businesses. His worry in the financial sector is not just with the banking sector, but also with the card sector. There is a lot of new FinTech today that could be highly disruptive. He would not be a buyer of either right now because of the valuations.

(Market Call Minute) Loves it, thinks it is a wonderful company. It is basically a toll road on every commercial transaction which takes place in a retail environment. He likes toll roads.

The dispute with Walmart (WMT-N) is a small deal, but the importance of the issue is for the potential of this becoming a much bigger issue internationally. Visa has a very good position and is the #1 card globally. It does more transactions and business than American Express (AXP-N), MasterCard (MA-N) and Discovery combined. Recently struck a deal to buy Visa Europe, which he feels is going to be very additive. Europeans tend to use more cash and less plastic, so there is lots of opportunity to catch some business there.

He is a little uncomfortable. They are getting a little more global competition and he doesn’t know exactly where they are ultimately going to land in terms of cell phone payments. They are not as well positioned. However, they have picked up a lot of market share from MasterCard (MA-N) and particularly American Express (AXP-N) over the past couple of years. A 20 Plus multiple stock and the growth rate is slowing down.

It has been testing a trend line and doing so positively. You will do fine with this one if you are a long term holder.

Strong seasonality from end of Jan. to May of each year. We have gone beyond the period of seasonal strength for this one. It has broken a short term trading range and established a downward trend. They may have a difficult time having good earnings going into the third quarter. A word of caution here.

This has almost a duopoly for card payment processing globally. Recently completed the purchase of Visa Europe, and completed it at a time when there was turmoil. This has never been cheap, always trading at a 20+ multiple. If you truly believe in the long-term payment by cards and people getting away from cheques, this is a great company to own.

A great company and pretty much a staple in every portfolio managers holding. Visa Europe is very interesting and they are obviously taking in the rest of that. He has a series of shorts against this, such as Capital One, Discover and Allied Financial.

Visa (V-N) or Starbucks (SBUX-Q)? A hard choice, because they are both wonderful, wonderful companies. This one is very attractive here. Just acquired Visa Europe. 0.75% dividend yield.

Technicals are kind of sideways from where it has been. It seems it is bouncing off the 200 day moving average at about $76. You might have a “trading” Buy at this point. Long-term, owning this or MasterCard (MA-N) makes a lot of sense as there is a secular shift from writing cheques and paying cash. However, this looks like it is having trouble getting past the $82 level.

(Market Call Minute.) (Visa (V-N) or MasterCard (MA-N)?) He prefers Visa which has a much larger network, more retailers and more users. However, the business is under pressure with Walmart pushing back on fees. There might be some compromises which could impact earnings, but more and more people are switching from cash to credit card, and this company stands to benefit.

(Market Call Minute.) The valuation is very high and the payments network environment is going through a significant change right now.

What the merchants in the US and Canada pay Visa and MasterCard (MC-T) are vastly different than what they pay in Europe and Asia. We pay much higher fees which hurts the consumer. Longer-term these rates to have to come down, one way or another. He would be cautious right now until we see how this unfolds. Doesn’t thinks it is going to end well for the banks and Visa.