Berkshire Hathaway Inc. (BRK.A), Automatic Data Processing (ADP): Potential Elephants for Warren Buffett

In a few words, Visa has a the biggest debit franchise in the US, is growing fast in international markets and does not issue cards or extend credit. Besides, the mobile payment phenomenon, which many used to viewed as a threat, now seems to be helping Visa’s network acceptance in both developed and emerging economies.

Growing in the US (US purchase volume rose 12% YoY) and owning the biggest share of e-market transactions (+47%), I believe Visa is a great asset to own. As usual, Value comes at a price: Visa trades at 2013 24.5 times P/E and pays a 0.7% cash dividend yield.

My Foolish conclusion.

Of course, I am not implying that Berkshire Hathaway Inc. (NYSE:BRK.A) shall invest in any of the companies named above. Nevertheless, it is difficult to argue that those companies do not fill many (or most) of the requirements needed to become a Buffett investment. Clearly, price could be an issue. Automatic Data Processing (NASDAQ:ADP) and Visa trade at significant premiums to the market’s average (the S&P 500’s P/E multiple is 18.4). That said, those companies don’t own average businesses. Always remember: “Price is what you pay, value is what you get.”

Federico Zaldua has no position in any stocks mentioned. The Motley Fool recommends Automatic Data Processing and Visa. Federico is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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