Visa Inc. (V)

This rules the world. In the US, there are more people working, gas prices that are still low, and he thinks there will be a heck of a travel season this summer. That is all good news for Visa.

This has been a great stock and has done very well over the years. They are buying Visa Europe, which is a terrific purchase for them. They do more business than MasterCard, American Express and Discovery combined.

(Market Call Minute.) A very good solid, long term franchise. This would be a Buy at the 52-week low.

A powerhouse. It is such a good business, and one where you have structural advantages in terms of taking volume from other forms of payment. While there is some pressure in terms of some top line pricing, they can add value added services. In this company specifically, you have the added advantage of Visa Europe getting lumped in. Pretty fully valued.

They are a company you don’t want to bet against. More and more people are going to paying for everything with a credit card. It is not a cheap stock however.

This falls in the consumer discretionary space which tends to be more volatile. Seasonal trend probably runs from the start of October all the way through to May. The chart shows a head and shoulders bottoming pattern, which it broke out of. There could be a bit of room left in that, but if looking at the broader market rolling over and a Sell signal, you might not want to be too aggressive in accumulating or holding this.

He likes it, but wait before you accumulate more or buy back in. It just hit a new high in November. There may be resistance there. He loves the business. Long term it is a good company to own.

(Market Call Minute.) He is really positive on this company. This is a leader in this payments space. Expansion into Asia is positive.

A technology financial play, which is going to become increasingly attractive. He really likes this name. It is one of the better ideas. They are integrating Visa Europe, and there are a lot of catalysts with that. There are going to be less and less cash transactions.

Got up to the mid-$80 when they announced the Visa Europe deal, and the stock pulled off about 10%. The market always wrestles with its valuation and multiple. They are probably going to earn somewhere north of $3 a share. You are paying a good price for a high-quality company, but as they continue to compound their capital with ROE’s and return on capital of 20%-30%, this is a stock you want to be in. There are still a lot of cash transactions outside of North America, and as the world goes more online, you are going to have to pay with a credit card.

Likes the scale of this over MasterCard (MC-N). They have now bought in Visa Europe, which is a big opportunity for them. The margins in Europe, for both companies are lower. Visa Europe has not been run as efficiently as MasterCard or Visa, so there is a big opportunity for them to push margins up. 85% of all transaction purchases today are still done by cash. Dividend yield of 0.76%.

Transaction driven and doesn’t take any risks. More international than MasterCard (MA-N). There are a couple of catalysts. (1.) Have made a deal to purchase Visa Europe, which is a big opportunity because the international market is much less penetrated than the North American market. The average European spends about $.37 of the dollar in cash, while in North America it is $.25. (2.) The Olympics are this year, and Visa always does well around the Olympics.

It has been a real performer. It is the play for participating in the move to plastic from cash. North America was the early adopter and it is priced in. V-N will never be cheap. It is always over 20 times PE and now at 25. It had a pullback of about 8% since January. This is a true growth story, but not a value story. It does not have much of a buffer if you are wrong.

It has been a strong performer in the past, but not recently. The market is not liking something about V-N. The warning bell would go off around $66.

There is very strong growth in consumer transactions, especially online transactions. Financial technology companies such as Visa and MasterCard (MA-N) are part of that key theme. If you look at the market over the past 4 weeks, a lot of money has been funnelled into things that are maybe a little more economically sensitive. He would not ignore the financial technology theme. It is going to be hard to hold this group back. (See Top Picks.)