Visa Inc. (V-N)

Not concerned if there is a consumer slow down. Ability to generate consistent revenues. Strong brand recognized around the world. Technology allows for increased growth. Ability to generate strong profit margins excellent. Not concerned about regulation in the business - company able to maneuver around this. 

Money-making machine, dominant position, great opportunity. Earnings forecast to grow 12-15% a year for next 3 years. Not cheap at 29x earnings. Doesn't own it, but could. Won't be a world-beater but 12 months out, once the easing cycle takes hold, the consumer should start to improve.

Prefers Mastercard for its higher growth rate over the last 5 years. Visa sees more regulatory challenges in the US and UK, and are more exposed to debit cards which is seeing regulation pushback on those fees. MA is more exposed to European markets where the cash-to-card conversion is still going, offering growth. Both companies enjoy great margins and are layering on extra services. A slowing consumer may slow growth rates from 12% to 8-10% in revenues, a slight, but not major headwind.

The PE has fallen and no longer expensive. Has $19 billion in free cash flow in the past 12 months and will benefit from lower interest rates.

Ability go generate revenues very strong. Technology widely used across the globe. Very high margins and ability to generate revenues. Move to digital payments also good for the business. Very strong "moat" with brand name, and tech stack. Consumers appear to still be strong. Would recommend holding for the long term. 

It's lagged the group over slower consumer spending at the lower end and in China, but Visa expects to increase earnings low double-digits and earnings in low-teens. The trend from cash to credit will continue, and Visa will continue to benefit from e-commerce.

Shares flattish YTD due to higher interest rates and inflation. Up 45% over past 5 years, beaten S&P over last 10 and 15 years. With prospect of Fed cutting rates, shares could grow again. A bullish opportunity. Strong free cashflow, reasonable valuation, excellent margins. Yield is 0.8%.

Reported solid Q3 with 10% YOY revenue growth. Cross-border volume up 14% YOY was a key growth driver. Stock buybacks. Her target is $300, so another 12-13% upside.

Recent earnings will slightly disappointing, and like many companies is seeing some growth slowdown. AmEx is cheaper. But Visa is a good play in payments. 

More and more credit defaults in this business. Uptrend of higher highs and lows was broken. Now seeing lower highs and lower lows, never good. Old breakout of 2021 will now probably act as support level around $240, see if it bounces there.

Don't predict, just prepare. Because if it doesn't bounce off $240, you have lots of pain ahead.

He owns both. Visa is more about dividend growth, but Mastercard is the preferred card in Europe. It's a dead heat. MA was ahead of its peers in tech by introducing fraud-prevention measures, but both consider themselves fintech companies. Bother could be under pressure if consumers spend less, but so earnings have been strong.

Largest unit processor in the world. Big competitive advantage. Societal shift to more cashless transactions, we're still only in the middle. Healthy profit margins. April revenues beat estimates, transactions increased a healthy 31%, total volume expected to grow by high single-digits this year. Yield is 0.77%.

Up around 11% over past 12 months, slightly lagging index. Averaged 9% annually over last 5 years. Reliable sales stream and operational model. Willing to adopt new trends. Up 400% over past decade, doubling S&P 500's performance. Her price target is ~$311, implies 15% potential upside. Scores 10/10 fundamentally.

Long-term theme of going from cash/cheques to digital currency, many countries still need to migrate over. Visa benefits whether it's credit or debit. Also developing other services for customers, and that's growing. Likes it here.

An analyst downgraded it today, commenting on its future growth, but he feels it isn't talked about enough. It continues to be the asset-lite and risk-free fintech play. It's consistent.

Other payments stocks are sexier, but you don't know if they will work. You need to be in the payments sector as more payments go digital. Visa is the largest and most profitable in this space. Has little capex, they buy back shares and gushes cash. Recent negative headlines about anti-trust and fines pushed the valuation down to a reasonable below 25x instead of a normal 30x. 

For 2024, 2025 and 2026, 2027, 2028 EPS is expected at: $9.95, $11.17, $12.63, $14.34 and $16.64, for a five year growth rate of 67% (inclusive, not annualized). Sales for the same periods: $35.9B, $39.7B, $43.7B, $47.5B, $52.0B (growth 44%). Given its global market share position, blue-chip status and performance history, we would be comfortable buying today. A better price might be $235 if one wanted to time things and wait for a possible correction. 
Unlock Premium - Try 5i Free