2. Visa Inc. (NYSE:V)
10-year Revenue CAGR: 10.96%
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) provides digital payment services. It offers credit cards, debit cards, prepaid products, global automated teller machines, and commercial payment solutions. The company’s stock has surged around 380% in the past decade. In addition, its revenue grew at a compound annual growth rate (CAGR) of 11% between fiscal 2024 and fiscal 2024. Visa Inc. (NYSE:V) has a solid market presence due to its consistent growth, resilience during economic turbulence and geopolitical conflicts, and wide moat.
Analysts are thus bullish on the stock and expect its revenue to grow at a CAGR of 10% between fiscal 2024 and fiscal 2027. Its EPS is anticipated to surge by 13% in the same time frame. The company is also expected to benefit from the secular trend of preferring e-payments over cash.
According to Allied Market Research, the global credit card payment market is expected to grow at a CAGR of 8.8%. Therefore, analysts expect Visa Inc. (NYSE:V) to continue its growth trajectory and expand its market share in the coming years, as it has already bought back around a fifth of its shares over the last ten years. It ranks second on our list of the best stocks for beginners in 2025.
Mar Vista Global Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years, yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Visa’s dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third, and we expect the company to continue to repurchase 2-3% of shares outstanding annually. Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50% and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.”
