As far as technology companies in the financials space go, Visa Inc. (NYSE:V) continues to look like a great long-term buy and hold opportunity right now. This stock is certainly not cheap by any stretch of the imagination. Indeed, the company’s valuation multiple of approximately 43-times earnings puts this company in an elite group in its segment of the tech sector. That said, I think the long-term growth prospects of this company warrant the valuation given the strong market position of this dominant player in the payments industry.
Visa has continued to be a dominant player in the payments industry for decades. This market position has provided the company with what I view as a durable competitive advantage, or "moat," from competitive forces that would otherwise cause margins and operating metrics to deteriorate over time. Visa continues to be the company to own in the payments processing space, and this is one of those companies I think investors can buy and forget about for a few decades, sleeping well at night.
The secular catalyst that will continue to drive Visa’s share price higher over time is a continued shift to online payments. In this category, Visa continues to outperform and is the preferable choice for consumers. I don’t expect anything to change on this front. Additionally, more transactions have shifted from cash to credit in recent years, and there’s still a ton of room for growth with this trend as well. We’ve just seen credit cards surpass cash as the most used payment method in recent years, so there’s a tremendous amount of growth still out there for companies like Visa to capture.
Invest wisely, my friends.
