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Today's Top Stock Picks 3 Stocks Selling at a Discount Some of the world’s premier stocks are now selling at an incredible discount. breakthroughinvestors.com OPEN MARKET ACTIVITY NEWS + INSIGHTS SOLUTIONS ABOUT LOG IN
Transcript of Today's Top Stock Picks - nilsonreport.comaccording to The Nilson Report. At a global level (based...
Today's Top Stock Picks3 Stocks Selling at a Discount
Some of the world’s premier stocks are now selling at an incredible discount.
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6 Reasons Why Visa Is A BuyC O N T R I B U T O R
Prableen Bajpai
P U B L I S H E DP U B L I S H E D
APR 6, 2020 1:11PM EDT
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V isa, Inc. (V) is the world’s largest payments network, offering advanced technology toauthorize, clear, and settle transactions for customers, businesses, and institutionsacross more than 200 countries. With proceeds of $17.9 billion in 2008, it was thelargest IPO the U.S. until 2014 (Alibaba became the largest). The company has
delivered strong business results over the years. As Visa advances on its goal “to be a singleconnection point for every transaction, everywhere, both on the its network and beyond,” here’sa look at what makes a case for Visa:
1. Dominant player. In the U.S., Visa, Mastercard, American Express, and Discover cardsgenerated $6.698 trillion in purchase volume in 2019, up 8.5% over 2018. Visa dominated 60% ofthe volume, followed by Mastercard at 26%. It is estimated that the general-purpose paymentcards with global brands are projected to generate 853.90 billion purchase transactions by 2028,according to The Nilson Report.
At a global level (based on cards in circulation), UnionPay accounted for 45% of all paymentcards, followed by Visa with a 20% share. However, if the Chinese markets are excluded, thenUnionPay only accounts for 1% of the world’s cards, thereby making Visa the largest globalplayer in terms of cards in circulation as well as in terms of global purchase transactions forgoods and services with a 50% share.
2. Financial technology. According to EY Global FinTech Adoption Index, 75% of the globalinternet-enabled consumers used a fintech service for money transfer and payments in 2019.This is a huge jump from just 18% in 2015. To enter into new businesses and addcomplementary enhancements to its existing business, Visa announced the acquisition of Plaidfor $5.3 billion in early 2020. Plaid enables consumers to conveniently share their financialinformation with thousands of apps and services, such as Acorns, Betterment, Chime,Transferwise, and Venmo. Currently, “one in four people with a U.S. bank account have usedPlaid to connect to more than 2,600 fintech developers across more than 11,000 financialinstitutions.”
3. Cross-border payments. It is estimated that nearly $80 trillion of money is sent via a wiretransfer or bank account globally. However, the process is complex and expensive. Tostrengthen the global payments medium, Visa acquired Earthport which is largest independentAccount Clearing House (ACH) network in the world. The acquisition of Earthport would enableVisa to reach 99% of the world’s banked population in 88 countries (including top 50).
Earthport takes Visa beyond the card to global payments via bank accounts. In another push totap global payments, Visa entered into an agreement with Western Union in mid-2019 toimplement Visa Direct, Visa’s real-time push payments platform, in an effort to bring speed andtransparency to the process of sending money around the world.
4. Strong partnerships . Visa continues to expand and strengthen its product basket as wellas partnerships. Visa Token Service which works by replacing a consumer’s card-relatedsensitive information with a unique identifier (token) enabling secure transactions (without card
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or person) has been endorsed by Apple Pay, Google Pay, Netflix, Samsung Pay, Fitbit Pay andGarmin pay.
In addition, other wearable devices, connected cars and home appliances are being enabled topay using Visa Token. The U.S. proximity mobile payment transactions is expected to reach$161.41 billion by 2021 according to estimates by eMarketer. Thus, without exposing theconsumer’s account to fraud, tokenization enables frictionless, card-free payments.
5. Share buybacks and dividends. Visa has been giving out a small but gradually risingdividend to its investors since its IPO in 2008. It started with a quarterly dividend payout of$0.0263 per share, and reached $0.30 per share as of January 2020. The company has also beenindulging in share repurchase programs over the years. In January 2020, the board of directorsauthorized a new $9.5 billion Class A common stock share repurchase program. In FY2019, $10.9billion was spent on dividend payout and share buybacks.
6. Sound financials. The company’s revenue has been rising at a steady pace over the years.It posted annual revenue of $15.08 billion, $18.35 billion, $20.61 billion and $22.98 billion inFY2016, FY2017, FY2018 and FY2019, respectively. Its net income was $5.99 billion ('16), $6.69billion ('17), $10.31 billion ('18) and $12.08 billion ('19). Visa has maintained a very healthyoperating margin; it was 67% in FY2019.
Not immune to COVID-19. All that said, Visa will be impacted by the current pandemic theworld is facing. In an SEC filing, Visa has said that it expects second fiscal quarter net revenuegrowth to be approximately 2.5–3.5 percentage points lower than the outlook shared inJanuary.
However, given that the situation remains fluid, the impact might be ‘more and prolonged’ amidweak consumer spending, travel halts and slowdown in businesses. Given that Visa does nothave any lending related risks, this is an opportunity to gradually buy a stock that has played asignificant role in the transition from paper to plastic, and is at the forefront as the world movestowards digital.
Disclaimer: The author has no position in any stocks mentioned. Investors should consider theabove information not as a de facto recommendation, but as an idea for furtherconsideration. The report has been carefully prepared, and any exclusions or errors in reportingare unintentional.
The views and opinions expressed herein are the views and opinions of the author and do not
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Prableen Bajpai
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Prableen Bajpai is the founder and managing partner at FinFix Research and Analytics; an enterprise engaged in
financial research, wealth management, training and financial literacy. She started her career in 2007 with a wealth
management firm, where she spent over six years as the research head. Prableen is a Chartered Financial Analyst (CFA,
ICFAI) and holds a Bachelor (Honours) and Masters in Economics with a major in Econometrics and Macroeconomics.
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