Visa Inc. (V)

Trades at exceptionally good valuation. Company should do well with an increase in consumer spending, which you are seeing signs for. Rich valuation because of rapid growth. The whole payment system is about to change. Apple, Google, and Facebook will come out with alternatives and put pressure on credit cards. Merchants and consumers want more choice. JPM would be a preference due to trading multiple.

Likes these names. Fell down to 200 day average and is bouncing there. A great name. Will continue to do well as people move from cheques to plastic.

This was a nice momentum stock. This and MasterCard (MA-N) both move in tandem to consumer spending as a result of expectation of stronger consumer spending. Very little to talk about from a company perspective, given how large it is. Not one single thing is going to move the needle for them. A momentum play and these momentum stocks are getting the wind taken out of them a little bit. Wait for things to stabilize.

You could wait for a better opportunity. There is pressure on these names from litigation on the cards from class actions. Fees going down a bit would easily affect their bottom line. Prefers over MasterCard.

Visa (V-N) or American Express (AXP-N)? At present she does not hold a credit card company, but it is a group that she is looking at because they have all pulled back close to their 50 day moving average. Visa and MasterCard trade at a much higher multiple (25X forward earnings), but growth rates are arguably stronger than American Express. Between this and Amex, she would probably prefer this because it is a larger, more dominant player. Penetration rate is still quite low in emerging markets.

This is a huge business that benefits from the network effect and there is really no end to their growth. The amount of transactions outside of North America is growing at incredible rates. Most people in emerging markets use cash, so the opportunities are limitless. Valuation is not cheap, but this is the type of business that you can buy and own for many, many years.

This and MasterCard (MC-N) are such big growth stories but both of them are very expensive. He would love to have a pull back. His model price calculation on this is $157.90, a 27% downside.

Great company. Not cheap. Trades at 20X earnings. Feels MasterCard (MC-N) is in a little better situation because it is not as global. Doesn’t have a very strong dividend yield and doesn’t think this is going to change over the next a while. Growth is not only coming from the developed world where we are moving away from cash, but in the developing world as people get wealthier and they are moving away from cash. There is lots of growth. Try to buy on a pull back.

A great, great company, but feels it is really expensive here. As long as they continue to grow earnings, it is a classic US large-cap momentum stock and will do well. The threat is that at some point, more regulations will come in which will compress the margins. However, it is hard to see what is going to break it in the short term. He would only be a buyer on weakness.

Wonderful performer. Also, you don’t have the credit risk of lending to people, you are the processing system and get your 3%-4% on everything that is done. Has been a marvellous formula for making loads of money. Appeared expensive when they became public, but have just gone from strength to strength. It is currently at all time highs and is up something like 3.5X from 2009. At some stage, the growth in the volume of transactions will start to taper off. In fact it is getting slower because people are starting to use things like smart phone, etc.

Owned in the past. A wonderful stock. No balance sheet risk. Tied to the US consumer. It bounces around because people trade it a lot. He would not add it here.

Financial sector is a big part of the market both in the US and Canada. Financial technology has done very well over the last few years. V-N is the most dominant company in the world. Growth in cashless payments has been really exploding in India and China. Very strong secular growth in this sector. Earnings growth is about 20% and they are beating estimates. He owns MasterCard.

He switched out of Master Card and into Visa. Visa has a much greater exposure to debit cards. Still recommends it.

Likes their business model. Have no credit risk or default risk and basically their biggest risk is litigation and they have shares in escrow for that. Great growth rate. Barriers to entry are extremely high. Global player and have some of the best brands out there. Valuation is too rich for him but for a growth investor, anything that pulls back to the 200 day moving average is probably a good entry point.

Margins same as MasterCard. Revenue growth is about 10% so he prefers MasterCard but Discover more so than MasterCard.