Author Topic: What do you think about VISA stock?  (Read 367 times)

andysandp

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What do you think about VISA stock?
« on: December 07, 2017, 09:43:18 AM »
Seems like in the future with tech and Amazon, everyone will be using credit cards instead of cash.  More and more people are using credit cards now and there is room to grow.

What do you think of buying VISA stock?
« Last Edit: December 07, 2017, 11:09:24 AM by andysandp »

MishMash

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Re: What do you think about VISA stock?
« Reply #1 on: December 07, 2017, 02:15:17 PM »
We bought it on the IPO and on the dip to 45 in the great recession, invested a total of 20k in it due to feelings we had similar to yours, combined with the fact that they don't lend they are just the middle man.  It's up 6 figures for us after the split.  We haven't sold any of it because I think it has a ways to go, their earnings are good, the future is digital, they just acquired Europe, they've taken over a number of large accounts like USAA and Costco and the numbers for VisaPay are going up, and they've been increasing the dividend.  However their PE is sky high.

You'd probably be better off in an index fund long term based on statistics but if you have money that you don't mind losing, then there are worse stocks out there to invest in IMHO.

JetBlast

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Re: What do you think about VISA stock?
« Reply #2 on: December 08, 2017, 09:35:01 AM »
I think you have the beginning of an investment thesis for Visa. Thereís a lot more thinking and research to be done. Some questions Iíd have to answer before buying:

Why will credit card use continue to climb?

Do they have a cost advantage that will protect them from the competition? In other words, can they charge a lower transaction fee than other credit card companies and still be profitable?

Could their business model be wiped out by cryptocurrencies like Bitcoin and Etherium? How about the more mundane like PayPal?

Why Visa instead of MasterCard or AmEx or Discover?

Whatís the difference in business model between those companies anyway? Does this make them more or less risky than their competitors? More or less likely to dominate the market?

How much more can it grow?

How fast can it grow?

Is the current price appropriate for the future earnings I expect?

Just a few things Iíd be thinking about. I started looking at Visa and MasterCard a couple years ago but got busy and never went back to the reports. I donít understand them well enough to have an opinion on Visa.

JumpInTheFIRE

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Re: What do you think about VISA stock?
« Reply #3 on: December 12, 2017, 02:38:54 PM »
The real question is "what information do you have about this stock that the general market doesn't?"  Why do you think the stock is mispriced?  You mentioned several items (growth in credit cards, room to grow), what makes you think that potential isn't already priced into the stock?  The price/earnings ratio for VISA was 32.36 for 2017, compared to 25.62 for the S&P 500 so it seems like there is already more future growth priced into the stock than the market as a whole.  Unless for some reason you know more about the industry and growth potential than the people who analyze stocks for a living, I would recommend buying a whole-market index fund rather than gambling on individual stocks.