5. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
10-year Revenue CAGR: 10.87%
Visa Inc. (NYSE:V) is a California-based leading American multinational payment technology company. It has established itself as one of the largest card payment organizations worldwide, and it enables electronic funds transfers across the globe through its vast network. VisaNet, the company’s global transaction processing network, plays an important role in authorizing, clearing, and settling payment transactions, which provides secure and efficient handling of millions of transactions each day.
In addition to VisaNet, the company operates the Plus ATM network and the Interlink EFTPOS network, which provide smooth access to funds and payment processing for both consumers and businesses. It also provides a range of additional services, including fraud prevention and risk management, data analytics, and loyalty programs, among others. It is among our best beginner stocks to buy now.
According to our database, 163 hedge funds held stakes in Visa (NYSE:V) in the second quarter, with positions worth $24.9 billion. With 16.8 million shares of the company, valued at $4.4 billion, TCI Fund Management is the largest shareholder of the company, as of June 30.
Visa (NYSE:V) is a prominent player in the global payment processing sector, distinguished by its extensive network and significant market presence. Despite common misconceptions, the company does not issue credit cards directly. It partners with banks and financial institutions that issue Visa-branded cards. These institutions manage credit risk and collect any unpaid balances, while the company focuses solely on facilitating the payment process through its vast network.
The company’s business model involves routing payments and charging merchants a fee for each transaction. The company then shares this fee with the card issuer and retains a portion as revenue. This setup positions Visa (NYSE:V) as a key beneficiary of the shift away from cash transactions, thanks to its established scale and brand recognition. According to Global Market Insights Inc., the payment processing solutions market, valued at $61.1 billion in 2023, is expected to grow at an annual rate of 10.5% through 2032.
With over 4 billion cardholders and more than 130 million merchants accepting Visa, the company has created a strong barrier to entry. This dominance ensures that even if the company adjusts its fees, it typically does not lose customers, as consumers prefer the convenience of Visa payments.
On July 24, Jefferies lowered the price target on Visa (NYSE:V) to $300 from $325 but maintained a Buy rating. The downgrade was influenced by a rare top-line miss and slower trends in July, coupled with challenges such as cross-border transaction slowdowns and ongoing merchant litigation. Despite these short-term hurdles, Jefferies believes that the company’s current valuation represents a solid entry point for investors. The company’s enduring strength in payment processing and its ability to navigate market fluctuations continue to make it one of the best beginner stocks to buy now.
Wedgewood Partners stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) detracted from performance despite healthy corporate results. The Company grew earnings per share +12% as payment volume growth was up +8% and cross-border payment grew +16%, adjusted for currency. There are over 4.4 billion Visa debit and credit cards in circulation generating over $15 trillion in volume over the past 12 months. There is another estimated $10 trillion in cash and check volume, globally, which we think Visa can continue to move over to its electronic payment rails. In addition, the Company has spent the past several years extending its payment capabilities into new flows of commerce, particularly for business-to-business transactions. This is another, extremely large (+$200 trillion) long-term growth opportunity for Visa that we believe investors are ignoring.”
