Buy Undervalued Visa Amid Inflation-Driven Revenue Gains
"Now, the first dividend stock I'm going to discuss is Visa. Now, Visa is one of those businesses that also benefits from increasing inflation because Visa takes a percentage of revenue of every transaction that happens using its network. So, if inflation is increasing and people are paying more for the same amount of things, then Visa's revenue is correlated to that increase in price level. Furthermore, Visa is trading at a market price of $320 and the intrinsic value per share is $488 as calculated by my proprietary discounted cash flow model."
The speaker highlights Visa as an undervalued dividend stock that benefits from inflation due to its revenue model, and supports this view by noting that its current market price of $320 is well below its intrinsic value of $488. The commentary underlines the competitive dynamics in the industry and the stock's ability to protect portfolios during market selloffs.
Reiterating Buy Rating for Visa
"Overall, I will be reiterating my buy ratings for Visa and Mastercard. And I'm also really interested in adding to my positions. I own Visa and Mastercard. I already highlighted I'm interested in adding to my Visa position than the Mastercard position."
The speaker reiterates his buy rating for Visa and expresses a stronger interest in adding to his Visa position compared to Mastercard, citing the company's strong competitive positioning and profitability.
Visa's Impressive Margins and Transparency
"How does Visa grow, man? Visa's got the only company with 98% gross margins, 70% operating margin. They don't even try to obscure earnings. How could they? They spend more on their their audit they spend running their service. It's like the greatest business ever."
The speaker praises Visa for its exceptional gross and operating margins and its transparent approach to earnings, highlighting a fundamental competitive strength.
Visa Undervalued for Long-Term Hold
"So, I mentioned Visa as one of the stocks you can buy now and hold forever. What you're looking at is my proprietary discounted cash flow valuation model for Visa, which calculates a fair value for the stock. And I calculate this business to be worth $467 per share. And you can buy Visa stock for $346. So, the stock is undervalued. But I will say that valuation is not as important to me when I'm looking at a stock for very long-term investment. One of the main criteria I look at for investments that I want to hold forever is that the business will be around 20 30 40 50 years from now and I feel relatively confident with Visa that they will be around 30 40 50 years from now."
The speaker presents Visa as a long-term buy, highlighting its strong market position and durability with a discounted cash flow assessment showing a fair value of $467 versus a trading price of $346, indicating undervaluation.