Visa Inc. (V)

(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.

On her watch list. Hasn’t bought it yet because of valuation. Trades at a pretty high multiple. In an attractive position in the global economy. Target price of about $200.

A company that is benefiting from a good long term secular trend. Huge growth in e-Commerce. Perfectly positioned. Growing earnings at over 20% per year.

In Australia retailers charge 1.5%-2% if you use a credit card, so there is some backlash coming down the pipe. This company is not taking advantage of what is going to be the future, of people just paying off their cell phone. There could be some hiccups. Right now MasterCard (MA-N) is the better valuation but is awfully expensive.

This type of stocks you buy on dips. His model price is $140.87 so it is a negative 20%-22%.

Visa (V-N) or MasterCard (MC-N) and what would be a true market value for Visa? Don’t look at the price of the stock, look at the valuation. Price doesn’t matter, it’s all about value. Feels both are priced to perfection. They are wonderful monopolies, with much more growth to happen, especially in emerging markets and he would buy them in a heartbeat if they fell 25%. At 20X earnings, you are paying way too much.