No Sub-Heading Needed
Here are arguably the two stocks you can sleep well owning and forget about, whatever happens: Visa and Mastercard. Two names that rarely make headlines (unless there’s a scandal, which doesn’t really happen) but quietly compound through cycles. I’m talking about an investment foundation – if you need a stable giant while chasing high-flying satellite positions, the two payment processors are the go-to solution.
Visa and Mastercard aren’t super high-growth FinTech hype plays, but they offer a different angle: stability. They are payment rails – the pipes that almost every transaction in the world runs through. No matter how crazy consumer sentiment gets, people still swipe, tap, and click. That gives them durability many others lack. In contrast to other FinTechs, both payment processors are so deeply embedded into the economy that their moat seems almost insurmountable. Even American Express, the third wheel, can’t get close to cracking their moat.
Yet that doesn’t mean no upside. Because at the heart of them lies earnings expansion and steady revenue growth (both around 10% p.a. projected until 2027). As e-commerce adoption expands globally, as consumers borrow more, and as digital payments replace cash, Visa and Mastercard ride the tide. Their margins are already absurdly high (we’re talking FCF margins north of 55%) and they profit from every transaction, no matter how ridiculously small. The business is omnipresent in every aspect of life. For most people, hardly a day goes by without relying on Visa or Mastercard. Their revenue base is sticky – switching costs are high for merchants, infrastructure is entrenched, and network effects are built in.
On valuation, these aren’t screaming bargains either. Why would they be? They’re both trading in the mid-30s forward P/E range. But they’re safer long-term bets than most growth names you see floating around. They’re not going to triple overnight, but they’re also not going to crash 50% on a disappointing quarter.
I don’t own either right now because they don’t fit into my strategy, but, similar to my space stocks post, that’s not to say they are in any way bad investments. Visa and Mastercard are excellent, pretty much flawless companies dominating their respective industries.
