Mar Vista Investment Partners, LLC, an investment management company, released the “Mar Vista Focus strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The S&P 500®Index rose for the fourth consecutive quarter in Q3 2024, indicating a good period for the U.S. stock market. In the third quarter, the strategy returned +3.39% net-of-fees compared to +3.19% and +5.89% returns for The Russell 1000 Growth Index and the S&P 500 Index. The market appears to be entering an easing cycle, with interest rates not exceeding historical norms, perhaps boosting gains. Kindly check the top 5 stocks of the strategy to know its best picks in 2024.
Mar Vista Global Strategy highlighted stocks like Visa Inc. (NYSE:V) in the third quarter 2024 investor letter. Visa Inc. (NYSE:V) is a payment technology company. The one-month return of Visa Inc. (NYSE:V) was 7.96%, and its shares gained 24.37% of their value over the last 52 weeks. On December 2, 2024, Visa Inc. (NYSE:V) stock closed at $316.65 per share with a market capitalization of $612.772 billion.
Mar Vista Global Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Visa’s dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third and we expect the company to continue to repurchase 2-3% of shares outstanding annually. Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50% and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.”
A close-up of a modern payments terminal with a pile of credit cards on the side.
Visa Inc. (NYSE:V) is in 6th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 165 hedge fund portfolios held Visa Inc. (NYSE:V) at the end of the third quarter which was 163 in the previous quarter. Visa Inc. (NYSE:V) delivered strong results in the fiscal fourth quarter 2024, with net revenue of $9.6 billion, up 12% year over year, and EPS rising by 16%. While we acknowledge the potential of Visa Inc. (NYSE: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 timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Visa Inc. (NYSE:V) and shared the list of Wells Fargo’s top technology stocks that can beat the flagship S&P index over the next 12 months. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.