10 Most Promising Growth Stocks According to Hedge Funds

7. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 163

Visa Inc. (NYSE:V) is one of the most promising growth stocks according to hedge funds in the financial service sector. While the company has made a name as a payment technology company offering credit debit and clearing products, it is well-positioned to benefit from the so-called war on cash.

The company is well positioned to generate significant fees from its card as consumer spending patterns improve after the Fed cuts interest rates. A booming economy is always good for Visa Inc. (NYSE:V)’s core business, which generates transaction fees.

In emerging economies, a larger percentage of the population tends to be without or have limited access to banking services. As these economies advance, Visa could see an increase in the amount of transactions it processes, leading to steady growth in its earnings.

Visa Inc. (NYSE:V)’s impressive profit margins are another strong reason why it is one of the most sought-after growth stocks. The firm reported an outstanding operating margin of 67% in the third quarter of fiscal 2024, a rare figure among other companies.

Its growth might attract little attention, but it’s incredibly resilient. Over the past ten years, the business has seen a revenue increase of over 7.8% annually (except a 4.9% decrease in the fiscal year 2020, which was heavily impacted by the pandemic).

Investors should feel confident that this positive trend will persist in the coming years as over half of Americans still rely on cash for a portion of their weekly purchases. This is an unexpectedly high percentage, particularly for one of the world’s most advanced economies. Visa Inc. (NYSE:V) is rated as a buy with an average price target of $315.42, implying a 14.28% upside potential.

By the end of Q2 2024, 163 hedge funds held stakes in Visa Inc. (NYSE:V), with Chris Hohn’s TCI Fund Management being the largest shareholder, holding stakes valued at $4.4 billion.

Here is what Wedgewood Partners said about 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.”