Visa Inc. (V)

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.

Looking at the price earnings ratios on both Visa (V-N) and MasterCard (MC-N), they are both beyond what he likes to pay even though he thinks they are both first-class companies.

Prefers this over MasterCard (MC-N) because it is a little bit cheaper by about 4 multiple points. It is down on the results of the Durban amendment and the court case that is going on. The amendment was to charge the merchant a fee every time a debit card was used. Debit cards are 60% of Visa’s business and a much smaller piece of MasterCard’s. Visa was hurt a little bit, which is an opportunity to get in at a lower price.

Phenomenal business. Every year there are more and more card-based transactions. In emerging markets it is very early days.

(Market Call Minute.) A terrific company. The fact that it went down so much on poor earnings presents a buying opportunity.

(Market Call Minute) Waiting for a pull back to $180ish.

About 60% of their business is now debit cards and doing very, very well. Spun off a consortium of European banks, but they have a Put on the company and they can put European Visa back to Visa, which would be quite good if that happened. A lot of their growth is international. Growth is running at around 20% per year and they are trading at about 20X earnings.

Stock got up to about 4X its BV and when he looked at the ROE and all the valuation metrics, it reached his target. Difficult to see that the stock can go any higher than its recent peak price. Given earnings forecasts, the only way he can see it going higher is as a pure momentum play. You might consider Discover Financial (DFS-N), which is a lot cheaper and has a decent ROE and could move higher.

There is so much good going on in that company. It is an expensive stock if that growth doesn’t continue. The challenge is trying to figure out when that growth will slow. She tries to stay away from this challenge.

Great company. Extremely high barriers to entry and it’s only real competition is MasterCard (MC-N). There are no default, interest-rate or credit risks. They are in technology not financials. Continues to drive very, very solid earnings. There are regulatory risks. Thinks this business will continue to grow over time. Very solid franchise. Trades at a fairly lofty valuation.