Ricardo Pillai
2 min read
In This Article:
We came across a bullish thesis on Visa Inc. (V) on Substack by Margin of Sanity. In this article, we will summarize the bulls’ thesis on V. Visa Inc. (V)'s share was trading at $365.12 as of May 16th. V’s trailing and forward P/E were 36.70 and 32.26 respectively according to Yahoo Finance.
Visa represents one of the most reliable compounders in a long-term portfolio, earning its position at the top due to a combination of consistency, high profitability, and structural dominance. Since 2020, the stock has been steadily accumulated during dips in valuation, particularly when its P/E fell below 30, reflecting a disciplined yet opportunistic approach to building the position. Visa operates a global electronic payments network, processing over 639 million transactions daily—instantly, securely, and invisibly. Its business model is simple but powerful: every swipe on its network earns the company a small cut, creating a massive revenue engine that runs quietly in the background.
Visa and Mastercard form a duopoly that functions as a “natural monopoly,” avoiding antitrust issues while maintaining overwhelming market dominance. Their network effects are nearly impossible to disrupt—consumers won’t adopt cards that merchants don’t accept, and merchants won’t accept cards that consumers don’t carry. This self-reinforcing loop cements Visa’s leadership and makes the business extraordinarily capital-light, requiring minimal reinvestment for growth. With exceptional EBITDA margins, sky-high returns on equity, and consistent shareholder returns through buybacks and dividends, Visa continues to quietly outperform. Its low capex requirements and defensive moat make it a resilient, worry-free holding that compounds value year after year. The company’s economic characteristics and capital efficiency offer rare exposure to an industry with minimal disruption risk and long growth runways. Visa’s dominance, durability, and simplicity make it a standout in any portfolio, with little need for active oversight. If Visa’s silent strength impressed you, don’t miss out on American Express.
Visa Inc. (V) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 181 hedge fund portfolios held V at the end of the fourth quarter which was 165 in the previous quarter. While we acknowledge the risk and potential of V as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an 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.
