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Visa is one of my top picks, this investor says

As a sector, fintech stocks are still down in the dumps, but one bright spot has been credit card king Visa (Visa Stock Quote, Charts, News, Analysts, Financials NYSE:V), whose share price is up a very decent 22 per cent over the past six months. And there should be more upside to come, according to portfolio manager Darren Sissons of Campbell, Lee & Ross, who just named Visa one of his best ideas for the year ahead.

“Their dividend has grown [about] 25 per cent over the last ten years on an annualized basis. Obviously, the transition to digital payments will continue and that’s a juggernaut,” said Sissons, speaking on BNN Bloomberg on Tuesday.

It’s been a tough year-and-a-half for fintech, which has fully gone out of favour with the market. Payments companies have been especially hit hard, with names like PayPal and Affirm in freefall from late 2021 to mid-2022, with zero indication of a recovery since. Then there’s Block, which has been in the spotlight lately due to a well-known short seller’s claims. That stock gained about 40 per cent over the first stretch of 2023 but has lost all of that ground over February and March. Even more traditional players like Mastercard have been up and down in recent months.

But Visa has a lot going for it, according to Sissons, including stability in the currently difficult economic and market period.

“[It’s] an inflation beneficiary. When you buy $7 coffees now, you don’t buy that with the coins in your pocket. You actually pay with a card,” he said. “There’s also the margin rich travel segment that’s coming back.”

“We’ve owned this for a long period of time. We like it, and I think you just default to companies that can do well and can perform well in environments that are shaky, and this is a great company,” Sissons said.

Visa scored top and bottom line beats of analysts’ forecasts in its most recent earnings report, where first quarter fiscal 2023 revenue rose 12 per cent to $7.9 billion and EPS was up an even better 21 per cent to $2.18 per share.

The company has a new CEO at the helm in Ryan McInerney, who took over from Alfred Kelly last month, a move first announced in November.

Sissons said although the basic premise of Visa is analog — “Yes, you’ve got the money or, no, you don’t” — the company’s marketing prowess is superb, and there’s stability in the name.

“There’s no balance sheet risk — all the banks take the balance sheet risk, so they’re a high margin business. It grows quickly and everybody needs it,” he said.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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