We recently published a list of 7 Best American Stocks To Buy and Hold in 2024. In this article, we are going to take a look at where Visa Inc.’s (NYSE:V) stands against other best American stocks to buy and hold in 2024.
Neutral Stance Amid Uncertainties
The tech sector has been showing positive performance amid market concerns, driven by improved earnings estimates and substantial investments in artificial intelligence. Approximately 40% of operating cash flow is currently allocated to AI, raising questions about when these investments will begin to yield returns. The strong profit margins of mega-cap stocks, averaging over 23%, compared to just over 8.5% for other sectors, suggest continued capital inflows into tech companies demonstrating earnings strength. While some consolidation and growth slowdown may occur, there is confidence that investor sentiment will eventually lead to a resurgence in these stocks.
As sentiments shift regarding major tech stocks, other profitable tech companies are maintaining positive momentum in the market. There was a conversation regarding this, covered a few days back in our article about the 10 Most Profitable NASDAQ Stocks To Invest In, where Jason Snipe, Odyssey Capital Advisors principal, discussed the tech sector’s mega-cap momentum, particularly in light of recent mega-cap stock downgrades and significant investor outflows. Here’s an excerpt from his sentiment:
“…This focus on AI has contributed to some recent downgrades but also suggests continued upside potential for select names within the sector.
…He acknowledged that while there may be some consolidation and a slowdown in growth, he believes that investors’ muscle memory will eventually lead to a resurgence in these stocks.
Snipe’s analysis underscores the complexities facing the tech sector amid market volatility and evolving economic conditions. While challenges persist, particularly with mega-cap stocks experiencing downgrades, there are also significant opportunities driven by innovation and strong profit margins that could support continued growth in this space…”
Katie Stockton, Fairlead Strategies founder, joined CNBC’s ‘Closing Bell’ on October 17 and highlighted that there’s a likelihood that the markets could move into choppier territory. Katie Stockton characterized her stance as neutral regarding the indices despite the strength of the trend and the participation of most stocks on the upside. She noted that while short-term momentum is currently positive, particularly behind major indices, there are concerns about potential problems if key players like NVIDIA falter. She highlighted that sentiment appears overly bullish or greedy, as evidenced by the Fear and Greed Index reaching an extreme level of 5%. This situation makes it challenging for the market to sustain overbought conditions, which are prevalent across various timeframes.
Stockton anticipates a pullback or possibly a more significant corrective phase in the fourth quarter for the S&P 500, suggesting that this could mark the beginning of a range-bound environment. She pointed to indicators such as the VIX, which has entered a new higher volatility cycle, and mentioned signs of long-term exhaustion indicated by the DeMark indicators, levels not seen collectively since late 2021. While this does not necessarily signal an impending bear market, it does enhance the likelihood of experiencing a choppier trading environment.
When asked about the recent performance of banks and cyclical stocks compared to defensive stocks, Stockton acknowledged that while there has been a positive move from the financial sector contributing to the S&P 500’s recent gains, it is too early to conclude that this represents a breakout in relative strength for financials. She indicated that most metrics suggest financials will likely perform in line with broader market trends rather than leading them. Furthermore, she expressed concern that mega-cap sectors are poised to lose their leadership position, which could pose challenges to overall market performance.
Regarding small-cap stocks, Stockton noted that while the Russell 2000 index made another attempt at an upside move, closing close to 2,300 with a 1.6% increase, long-term trends still indicate underperformance relative to the S&P 500. She pointed out that there has not been a breakout in the Russell 2000, which remains stalled below resistance levels established during summer highs. Consequently, she does not see actionable opportunities in small caps at this time and anticipates neutral trading conditions for this segment.
On the topic of bonds, Stockton mentioned that Treasury yields have shown some upside momentum but backed off recently. She sees potential entry points in Treasury bond proxies like TLT (iShares 20+ Year Treasury Bond ETF), suggesting signs of short-term downside exhaustion within a broader long-term uptrend for fixed income. She believes there is an opportunity for investors to enter Treasury bond proxies now, while also expecting yields to stall without significant long-term declines.
Her insights highlight her focus on maintaining balance amid prevailing uncertainties in both equity and bond markets.
Methodology
To find the best American stocks, we used Insider Monkey’s proprietary database to find US stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
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: 163
Visa Inc. (NYSE:V) is a global payments technology company that provides a range of payment solutions, operating a global payments network that connects businesses, consumers, financial institutions, and governments. Its products and services include credit cards, debit cards, prepaid cards, mobile payments, and electronic payments. It facilitates billions of transactions worldwide every day and is committed to providing secure, reliable, and efficient payment solutions.
The company’s global reach extends to over 200 countries with 4.5 billion cards in circulation. Recent expansions include Peru’s Yape super app and Vietnam’s digital wallets, adding millions of users. FQ3 2024 revenue reached $8.9 billion, a 9.57% year-over-year improvement, with global payments volume growing 7% (5% in the US). Its acquisition of Featurespace enhances fraud detection and risk-scoring capabilities. The company’s new Visa Commercial Solutions Hub aims to disrupt the $145 trillion commercial payments market by offering a unified platform for businesses and financial institutions.
Its VTAP platform, launched in October, enables banks to issue tokenized fiat currencies on blockchain networks, aimed to bridge the gap between traditional finance and blockchain technology. Visa Inc.’s (NYSE:V) acquisition of Featurespace, an AI-focused fraud detection firm, further strengthens its position as a secure and reliable payment provider. On October 16, it partnered with Analytics Partners to help retailers optimize their marketing budgets using AI-driven insights, aiming to improve retailers’ return on advertising spending through data-driven solutions.
Visa Inc.’s (NYSE:V) strong position in the global payments market, combined with its impressive financial performance and growth potential, makes it a compelling investment opportunity. The company’s resilience, high-profit margins, and expansion into emerging markets position it for continued success.
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 7th on our list of best American stocks to buy and hold in 2024. While we acknowledge the potential of V as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
