We recently compiled a list of 10 Most Promising Long-Term Stocks According to Hedge Funds. In this article, we will look at where Visa Inc. (V) ranks among the most promising long-term stocks according to hedge funds.
Another 50 bps Cut is Still Restrictive
The labor market has been more resilient than ever. On October 4, Gary Cohn, the IBM vice chairman, and former US National Economic Council director in the Trump administration, appeared in an interview on Yahoo Finance to discuss the job report and the US economy.
Cohn suggests that the jobs data is the least scientific information the government puts out and therefore, it must be taken with a grain of salt. However, he emphasizes the importance of understanding trends. The number of people entering the workforce is expanding and jobs are being created, deducing that the market is in a neutral place.
Cohn believes that the US economy is normalizing. He reveals that we have not lived in a normal economy in over a decade, therefore, relative to history, the status quo is fairly reasonable. He adds that the Fed has orchestrated a soft landing and expects another 50 basis point cut before the end of 2024, which according to him is still restrictive.
Portfolio Manager Highlights High Growth Sectors
As the AI flame starts to settle, the market may be up for a major shift. On October 7, Keith Buchanan, GLOBALT Investments senior portfolio manager, appeared in an interview on Yahoo Finance to discuss his expectations of the market.
Expectations for earnings have been revised from mid-single digits to mid-double digitals, promising robust growth as 2024 comes to a close. Buchanan suggests that most of the growth comes from artificial intelligence and the widening of earnings growth beyond traditional growth sectors like technology.
This year, the industrial and energy sectors have enjoyed greater returns capturing a large chunk of the market. Buchanan is highly bullish on AI plays and value stocks. He also adds that names in financials, industrials, and consumer discretionary are poised for growth ahead of 2024. He advises investors to consider geopolitical events before making any investment decisions.
Now that we have assessed the future of the financial markets and possible sectors eyeing growth, let’s take a look at the 10 most promising long-term stocks according to hedge funds.
Our Methodology
To find the most promising long-term stocks according to hedge funds, we went over multiple rankings over the internet to list long-term blue chip stocks. We then examined the analyst upside and the hedge fund sentiment of these stocks as of Q2 2024 and picked the most popular ones. The stocks are sorted in ascending order of the number of hedge fund holders as of Q2 2024 as a primary metric and analyst upside as of October 13, as a secondary metric.
Why are we interested in 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
Analyst Upside as of October 13, 2024: 14%
Visa Inc. (NYSE:V) is a payment card services provider based in the United States. It facilitates electronic fund transfers to people across the globe. It also offers commercial patent solutions, sells cards, and provides B2B payment options. In the past 12 months, Visa has facilitated 296.8 billion transactions with a total volume of $15.5 trillion.
The company has an immense focus on expansion. In the past quarter, Visa Inc. (NYSE:V) partnered with Yape, a super app in Peru housing over 15 million users, to facilitate money transfers directly through mobile devices. In addition to that, digital wallets with over 50 million users enabled Visa cards for their customers in Vietnam.
Towards the end of September, the company announced the acquisition of Featurespace, an AI payments protection technology developer. The acquisition will position Visa as a crucial stakeholder in fraud detection and risk scoring. Visa Inc. (NYSE:V) also launched a pilot project, its Visa Commercial Solutions Hub, to bring all its commercial payment services under the same roof, disrupting a $145 trillion market.
Analysts are bullish on the stock, which comes as no surprise. The company has a strong network that is prevalent in 200 countries and territories from across the globe. Visa Inc. (NYSE:V) has more than 130 million merchant locations and has over 4.5 billion cards in circulation across the globe.
Aoris International Fund stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
Overall V ranks 5th on our list of the most promising long-term stocks according to hedge funds. While we acknowledge the potential of V as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an 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 is originally published on Insider Monkey.