We recently published a list of 10 Best Wide Moat Stocks to Invest In. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other best wide moat stocks to invest in.
Russell Investments continues to monitor and analyze the potential for policy changes in President Trump’s second term in office. In December 2024, the North American Chief Investment Strategist noted 4 areas of focus- i.e., tariffs, immigration, fiscal policy, and deregulation. Let us see what impact tariffs can have on the broader US economy and what should investors do in these uncertain circumstances.
Impact of Tariffs on US
As per Russell Investments, the macroeconomic uncertainty is expected to continue to remain elevated in the near term, while the investors keenly wait to see whether the tariffs get scrapped after the 30-day period. To give a brief context, the US President announced that he and Mexican President Claudia Sheinbaum have decided to delay the imposition of these tariffs for 30 days. Notably, Trump also announced that he has delayed the imposition of tariffs on Canadian goods for 30 days.
If tariffs get implemented, there can be a modest one-time increase in price levels for US consumers, says the investment firm. This might push out marginally when inflation will return to the target range of 2%. However, in the base-case scenario, the firm expects that the US Fed will succeed in returning inflation to 2%. From a growth perspective, while the tariffs might create a modest drag on the US economic activity, the broader economy is expected to avoid a recession.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Should Be the Strategy for Investors?
Saxo Bank A/S believes that investors are required to ignore the noise and remain focused on fundamentals. While short-term volatility remains inevitable, investors need to prioritize long-term growth trends over reactionary trades. Therefore, investing in quality companies having strong domestic revenue, pricing power, and resilient business models is expected to withstand such headwinds. The bank believes that investing in high dividend-paying stocks in defensive sectors such as consumer staples might help mitigate the short-term negative impacts. Furthermore, the focus can be on secular growth themes that have the potential to transcend political cycles.
Elsewhere, Russell Investments opines that investors can benefit from staying disciplined during uncertain times. While the tariffs can adversely impact the broader economic growth, mainly in Mexico and Canada, there is a possibility of central banks and governments stepping in with support to mitigate the impacts of tariffs.
Our Methodology
To list the 10 Best Wide Moat Stocks to Invest In, we scanned through VanEck Morningstar Wide Moat ETF and some online rankings. Next, we chose the stocks that were popular among hedge funds. Finally, the stocks are arranged in the ascending order of their hedge fund sentiments, as of Q3 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).
A close-up of a modern payments terminal with a pile of credit cards on the side.
Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) operates as a payment technology company in the US and internationally. The company has been enjoying a wide economic moat as a result of its scale, brand recognition, technology, and network effects. Collectively, these factors allow the company to process transactions securely and efficiently globally. The rise in consumers using a payment network will make that network attractive to merchants. In turn, this will make the payment network more convenient for consumers, and the cycle continues. Therefore, Visa Inc. (NYSE:V) is well-placed to benefit from its large scale.
TD Cowen analyst Bryan Bergin maintained the bullish stance on the company’s stock, offering a “Buy” rating on 28th January. The analyst noted the stability of Visa Inc. (NYSE:V)’s core consumer payments business, with strength in holiday spending throughout travel, retail, and entertainment sectors. Furthermore, the analyst highlighted the company’s robust performance in Q1 2025, aided by a 16% increase in cross-border volume and higher-than-anticipated international transaction revenue and value-added services.
This growth stemmed from healthy consumer spending and positive macroeconomic conditions, resulting in an optimistic outlook for Visa Inc. (NYSE:V)’s net revenue and EPS growth. Montaka Global Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Montaka owns several duopolists in the financial services industry, including Visa Inc. (NYSE:V) and Mastercard in payments; and S&P Global in credit ratings and financial data services. These businesses have competitively protected and reliably growing core businesses. But they also have newer, high-probability adjacent opportunities. The market, however, is underappreciating this powerful combination, in our view.
For Visa and Mastercard, their core businesses in global payment processing are being complemented by significant growth in two areas:
- New processing opportunities in peer-to-peer, business-to-business, business-to-consumer, and government-to-consumer payments; and
- Value-added services, including risk, fraud-detection, issuance, acceptance, and open banking.”
Overall, V ranks 4th on our list of best wide moat stocks to invest in. 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 time frame. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.