The fear is that if there's a recession, then payment transaction volume will drop. But a recession will be temporary, if it happens. Their valuation has fallen to somewhere more reasonable. Their earnings have done quite well. The PE has fallen to the low-30s to low-20s which is much more acceptable.
Stockchase Research Editor: Michael O'Reilly Holding the largest market share of US consumer spending for transaction processing along with MA, we select V as a TOP PICK. Currently V is valued slightly better at 30x earnings and 11x book, compared to MA at 34x and 43x, respectively. The company has been increasing dividends for 14 consecutive years and it is backed by a payout ratio under 25% of cash flow. Recently reported earnings beat expectations and supports a 42% ROE. We would trade this with a stop loss at $165, looking to achieve $268 -- upside potential over 39%. Yield 0.75% (Analysts’ price target is $268.05)
Cross-border spending is back. Good siteline to the economy, saying no recession. Tailwinds of the digital economy. There are 2 railroads, V and MA, and you have to be on them. Great inflation play. Yield is 0.71%. (Analysts’ price target is $266.24)
They benefited from e-commerce shopping during the pandemic. They've seens a strong rebound in US domestic travel above pre-Covid levels. International travel, ex-Asia, is starting to return to pre-Covid levels. Visa expects to grow 18% this year, after removing Russia (was 4% of earnings). EPS to grow even higher. More business travel is also a tailwind. (Analysts’ price target is $266.92)
They reported a strong quarter last week. Shares jumped, but then slipped today. The markets won't reward a quarter, because of the movement in bonds and yields.
Visa reported yesterday numbers that were way better than expected with tremendous credit card growth in the U.S. and the rest of the world, except Russia which amounted to 4% of their business in 2021. Despite Russia, numbers were so good that shares today surged 6%. Saw 30% earnings growth fuelled by cross-border transactions, and reported top and bottom line beats. He sees great performance ahead.
Allan Tong’s Discover PicksVisa trades at a 41.7x PE, slightly above Mastercard’s 40.4x, and pays a 1.5% dividend, which is safe at a 22.62% payout ratio. It beat its last four quarters. Its EPS is $5.03, rising 24.65% over the previous year. True, Visa shares struggled over the winter, barely hovering above $200 and are currently far from their $252.67 highs, but the streets see shares breaking new highs to $275.88 based on 18 buys and two holds. Read 3 Consumer Stocks for Summer for our full analysis.
Interchangeable networks with Visa, MasterCard and American Express which will all continue to do well. PayPal is not a competitive threat. Visa has struggled a bit because of tourism business decline but this should improve slowly.
Gaining market share around the globe, with most of the alternative payment systems. Massive free cashflow. In terms of security, they're the most important player in the world and he sees them remaining so for many years.
V vs. MA In the short term, both will benefit from world travelling. A big portion of their money comes from foreign exchange. Post-Covid stocks. Long term, there's room for both plus newer technologies like PYPL. Newer tech has a tendency to replace the old. A generation from now, there may be secular change from blockchain, but that's not for a while.
Conclusion to buy now/pay later programs is that they are not a threat.
Not worried about competitors (Block, PayPal etc.)
Earnings and share price still strong.
Travel opening up as pandemic recedes, which is good for business.
Trend to plastic continues. Market presence continues to grow. Incredible growth stock that's positioned well to a recovery. Undemanding multiple of 26x with 17% growth. A money maker over time. The more traffic, the more Visa benefits.
Effect of buy-now, pay-later stocks? Visa is a vital intermediary in almost all transactions, and it has a tremendous grip (with Mastercard) on world payments, and this won't change even with these stocks. Covid's slowdown of travel is ending and this will list Visa, a great stock to hold for the future.
Payment providers are getting smoked. Model price is only $142. In another 3-4 weeks, we'll get Q1 earnings. Hold here, and if the market bounces, Visa will participate, though not as much as some high tech.
Visa Inc. is a American stock, trading under the symbol V (previously V-N on Stockchase) on the New York Stock Exchange (V). It is usually referred to as NYSE:V or V