We recently compiled a list of 10 Best Digital Payments Stocks To Buy Now. In this article, we will look at where Visa Inc. (NYSE:V) ranks among the best digital payments stocks to buy now.
Digital Payments Industry: An Analysis
It was the global pandemic that catalyzed the contactless ways of payment around the world. As physical stores shut down, digital payment methods became the norm with shoppers looking for a less personal and more digital interaction. According to a poll by the digital payment leader Mastercard, more than half of Americans opted for some form of contactless payment such as tap-to-go credit cards and mobile wallets amid COVID. The trend has continued and is here to stay since more than two in every three in-person transactions globally on Mastercard’s network were reported to be contactless in 2023.
McKinsey’s 2023 Digital Payments Consumer Survey reveals that online purchasing took the lead among all other kinds of digital payments among consumers. With the return of in-person shopping, using a device to pay at retail places by scanning a bar code with it or tapping it on a point-of-sale device, also known as in-store digital payments, has grown. Simultaneously, the in-app digital payments and peer-to-peer payments have risen since 2021. This reflects the already mainstream consumer digital payments which are and will continue to evolve.
The other market which tends to be highly addressable and promising is the B2B digital payments market with businesses looking for more ways to drive efficiency and engage in cross-border business transactions. This market was valued at $1.69 trillion in 2023 and is expected to grow at a compound annual growth rate of 9.38% from 2024 to 2033, as reported by Brainy Insights. Global Payments CEO, Cameron Bready, mentioned B2B payments as the next frontier for payments, with significant growth in the digitization of B2B payments. In an interview with CNBC, he emphasized this big opportunity by predicting the B2B market to be 3 to 4 times the size of the consumer market. According to him, this market remains highly fragmented and under-penetrated.
Our Methodology:
We first used a stock screener and mobile payments ETFs to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best digital payments stocks to buy now have been arranged in ascending order of their hedge fund holders as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a trusted leader in digital payments. The company facilitates transactions between merchants, consumers, government entities, and financial institutions across more than 200 markets. Visa’s journey started in 1958 when the Bank of America introduced the first consumer credit card program in the United States. It was in 2007 that Visa formed a global corporation and eventually went public in 2008 in one of the largest IPOs of all time.
With the ambitious purpose of being the best way to pay and be paid, Visa Inc. (NYSE:V) powers the global economy. The firm connects 4 billion account holders to more than 130 million merchants, 14,500 financial institutions, and governments. Among its peers in the transaction and payment processing services, Visa has a significant market cap of $540.20 billion. The firm accelerates its revenue growth in consumer payments, new flows, and value-added services.
In consumer payments, Visa moves trillions of dollars of consumer spending in cash and checks to cards and digital accounts. The firm recently closed a good fiscal third quarter of the year with net revenue growth of 10%. The key business drivers during the quarter were payments volume increasing by 7%, processed transactions increasing by 10%, and cross-border volume increasing by 14%, on a year-over-year basis.
Visa drove strong payments volume growth rates in most major regions including Latin America, CEMEA, and Europe ex U.K. Only Asia Pacific payments volume slowed due to the difficult macro environment in China. Beyond payments, the company is also building its portfolio of value-added services for its clients and partners. These value-added services offer the firm an opportunity to diversify its revenue.
Visa’s financials remain robust. The firm recorded $32.7 billion in net revenue and $12.3 trillion payments volume in 2023. In conclusion, the firm has a lot to offer through its globally spread reach, brand value, financial strength, and its leading market position. As of Q2, Visa Inc. (NYSE:V) is held by 163 hedge funds. TCI Fund Management was the largest shareholder in the company with a stake worth $4 billion.
Overall V ranks 1st on our list of the best digital payments stocks to buy. While we acknowledge the potential of V as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.
