Is Visa Inc. (V) the Best Quality Stock to Invest in Now?
March 15, 2025
We recently published a list of 12 Best Quality Stocks to Invest in Now. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other best quality stocks to invest in now.
Tom Lee, co-founder of Fundstrat Global Advisors, believes that a significant rebound is in the offing, despite the tough start to the year. The strategist opines that there is a possibility of ~10% – 15% bounce over the coming months. In an interview with CNBC, he stated his expectations about March, April, and May witnessing the rally. Therefore, missing critical trading days can be a mistake for investors.
Lee believes that investors can consider buying as the markets are unsettled. In an interview with CNBC, he went on to explain that the market’s 10 best days last year resulted in the addition of up to 20 percentage points for the broader S&P 500. However, if we exclude these 10 days, the index increased by only 4%. According to him, the best days might be around the corner. If there are tensions related to the growth or related to the employment market, Trump or the US Fed can intervene to bring some stability. These are the favourable catalysts for the upcoming weeks, says Lee. Overall, he believes that a large chunk of the bad news has been priced in as markets have seen a significant decline.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Morningstar, while echoing the views of Adam Hetts (Janus Henderson Investors portfolio manager), mentioned that the longer-term perspective is expected to provide investors a silver lining. Hetts believes that there are bright spots in the international markets such as Europe and China, that have surpassed the performance of the US stocks since the beginning of the year. Even though the mega-cap tech stocks have been declining, they are getting cheaper as compared with the elevated valuations just a few months ago.
According to experts, there are several signs of economic strength. Gus Faucher, chief economist for PNC Financial Services Group, told Morningstar that consumers continue to spend amidst weakness in the sentiment data. Also, the labor market has been holding up. Overall, the chief economist doesn’t see any sort of fundamental weaknesses in the broader economy that can signal a problem. As per Morningstar chief US market strategist David Sekera, the investors are required to focus on the fundamentals and valuations, while maintaining a long-term view.
To list the 12 Best Quality Stocks to Invest in Now, we sifted through the holdings of iShares MSCI USA Quality Factor ETF. Next, we chose the stocks that are popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a modern payments terminal with a pile of credit cards on the side.
Number of Hedge Fund Holders: 181
Visa Inc. (NYSE:V) operates as a payment technology company in the US and internationally. Analyst Iris Gao of DBS maintained a “Buy” rating on the company’s stock with a price objective of $330.00. The analyst’s rating is backed by factors reflecting the company’s robust market position and growth potential. Visa Inc. (NYSE:V) enjoys a dominant position in the digital payment industry, which is expected to see significant expansion with cash transactions declining globally.
The analyst believes this pivot to electronic payments provides significant opportunity for Visa Inc. (NYSE:V)’s core business, mainly with the increasing shift towards e-commerce and cross-border transactions, which can fuel growth in international transaction volumes. Furthermore, the company’s Network of Networks strategy and Visa Direct platform are well-placed to capitalize on vast new flows throughout various payment types, expanding its market reach. The analyst further noted that Visa Inc. (NYSE:V) benefits from increased operating margins, mainly because of a healthy competitive moat and a significant network of merchants and cardholders, offering significant network effects.
Alluvium Asset Management, an asset management company, released its Q4 2024 investor letter. Here is what the fund said:
“Last quarter we wrote about the credit card companies and the Fund’s latest investment, Visa Inc. (NYSE:V) (up 15.2%). With its strong share price performance, that position had grown to be greater than 5%. As we had discussed here, we consider there to be negligible differences in investment merits when compared to Mastercard (up 6.8%). Whilst Visa appears a little cheaper on traditional price metrics, our view is that Mastercard has marginally higher growth prospects. Irrespective, both are deserving positions in the portfolio, and given their similarities, and the 5/10/40 rule, in order for us to maintain maximum portfolio flexibility it made sense to sell a little Visa and buy a little Mastercard, and their combined position is 6.2%.”
Overall, V ranks 5th on our list of best quality stocks to invest in now. While we acknowledge the potential of V as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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