Visa Inc. (V)

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.

Future prospects for payment companies such as this and MasterCard (MC-N) are very good. The competition is more at the bank level. As the economy globally improves, people will be putting more and more onto their cards. As a value investor, he can’t see a lot of value, but if you are a long-term investor, it is probably a good one to own.

(A Top Pick Jan 10/13. Up 36.38%.) Good solid company. 20% grower. Very well managed. Looking for very good earnings to be reported next week.

MasterCard (MA-N) or Visa (V-N)? Neither one of these is cheap. He keeps waiting for an entry point and keeps not getting one. Trading at 25X earnings, which is pretty expensive. Both of these companies have a tremendous moat around operations. So well entrenched everywhere globally that it is very difficult to compete. Because of this, they do deserve a premium. In his view, this one is probably the better in terms of its line-up of banks that it is associated with and its penetration of world markets.

Chart shows a nice long upper trend line. Right now we are slightly over it so it could come off. 5%-10%. If that happens, there is a chance for it to come down to the $190 level. See if it holds the $207 level or drops below that a bit. Relative Strength (RSI) is turning over. Got to around $80 which is reasonably high. Every time it has hit $80 over the last 2 years, it was a good indication you are going to have a correction. Doesn’t think you can go wrong with this name.

MasterCard (MC-N) or Visa (V-N) for a 3-5 year hold? These are toll booths and just get money when somebody uses their card. There are no credit risks or other issues. Both have great global growth going on. It’s a tough call as to which to buy. This one is more international but MasterCard has the opportunity to become more international so he thinks he would choose MasterCard because of that.

This whole space is extremely appealing. They just settled on the swipe transaction fees. This is not over yet as the merchants and the big box retailers are saying that the settlement and the rules do not go far enough. There are a couple of really strong trends that are really taking hold. First of all, we need this economy to pick up and he believes it has and retail spending, cashless payments and mobile payments are becoming a bigger and bigger part of it. In this same space, eBay (EBAY-Q) is interesting, it is only up 3% this year. They own PayPal, which, traditionally online, has started to move off-line. Likes the whole space.

Doesn’t like the price and the dividend is very small. There is continuing growth from US consumers along with some cross border business. Probably worth having if you have some higher risk money. Quite interesting from a longer-term viewpoint.

Growing very close to 20% compound, which for a large company like this, is really impressive. They don’t have a lot of credit risks. Prefers this over MasterCard (MC-N).

(Market call minute.) Still has some great international growth. It’s always hard to buy because it is always expensive, but it keeps going higher because the earnings are growing. Thinks this will continue.