Visa saw global credit and debit purchase volumes grow by 4% year-over-year in the March quarter. Analysts expect revenue to increase 12% in fiscal 2013 and 10% in 2014. Driving this growth, as you might expect, will be the push to mobile payments. Some of Visa’s other initiatives includes expanding its prepaid card and money transfer offerings.
eBay Inc (NASDAQ:EBAY) is another great way to play the mobile payments sector. In part because it has one of the leading companies, PayPal. But also because of the inherent diversification the company provides, unlike VeriFone Systems Inc (NYSE:PAY) or Visa, which are heavily tied to payments. eBay Inc (NASDAQ:EBAY) is both a payments and an e-commerce company.
eBay Inc (NASDAQ:EBAY) is expected to see revenue up 15% in both 2013 and 2014, with modest gains in its marketplace segment (ebay.com), but mainly driven by the payments segment. Its payments segment includes PayPal and Bill Me Later. eBay’s marketplace segment is the leader in online auctions.
Hedge fund trade
Going into 2Q, there were a total of only 19 hedge funds long VeriFone Systems Inc (NYSE:PAY), a 12% increase form one quarter earlier. Billionaire Paul Singer’s Elliott Management has the largest position in the stock, worth $60 million (check out Elliott’s top selloffs).
Meanwhile, the likes of Visa and MasterCard command much more interest. Visa had 88 hedge funds long the stock at the end of 1Q, a change of 9% from one quarter earlier. This includes John Scully’s SPO Advisory with the the most valuable position, worth close to $842 million, accounting for 11.4% of its total 13F portfolio (see SPO’s top stocks).
Going into 2013, 68 hedge funds were long MasterCard. Tom Russo’s Gardner Russo & Gardner had the biggest position in the stock, worth close to $510 million and accounting for 6% of its total 13F portfolio (check out what Gardner has been buying).
Bottom line
Although VeriFone has managed to grow EPS an annualized 45% over the last five years, the future isn’t so bright; analysts expect the company to grow EPS at an annualized 13% over the next five years, whereas Visa is expected to grow at 18.5% and MasterCard 17.6%.
VeriFone has been hammered over the past 12 months, down more than 50%. I think there could be further pressure for this stock give the rapid innovation taking place in its industry, which includes the decreasing demand for conventional POS terminal devices. Meanwhile, PayPal is one of the leaders in the industry, and by investing in eBay investors can gain access to the payments market and the e-commerce market.
The article Paying It Forward via Mobile originally appeared on Fool.com and is written by Marshall Hargrave.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends eBay, MasterCard, and Visa. The Motley Fool owns shares of eBay and MasterCard. Marshall 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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