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Visa Is the Juggernaut of the Payments Business. It’s One of Our Top Stock Picks for 2022.

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This article is an excerpt from Barron’s 10 favorite stocks for 2022. To see the full list, click here.

Visa is the juggernaut of the payments business, processing over $13 trillion in transactions during its fiscal year ending in September.

The stock, at about $214, looks appealing after a 15% decline from a 52-week high in July.

Visa (ticker: V) trades for about 30 times projected earnings of about $7 a share in its current fiscal year. While not cheap, its multiple looks reasonable, considering its lucrative global duopoly with  Mastercard  (MA), the shift away from cash, new services, and the prospect of double-digit annual revenue and earnings gains. Merchants may gripe about interchange fees, but Visa remains indispensable.

Visa sees revenue rising in the “high end of midteens” in its current fiscal year, and analysts forecast 20% growth in earnings per share. The company continues to see recovery from depressed pandemic activity.

David Rolfe of Wedgewood Partners, a Visa holder, says, “Visa will get a big boost when borders reopen—but even after that normalizes, Visa should be able to grow volumes and revenue at double digits.”

Morgan Stanley analyst James Faucette has an Overweight rating and a $280 price target on the stock.

Company / Ticker
Recent Price
YTD Change
2021E EPS
2022E EPS
2022E P/E
Dividend Yield
Market Value (bil)
Amazon.com / AMZN
$3,377.42
4%
$41.11
$51.37
65.7
None
$1,713
AT&T / T
23.71
-18
3.38
3.17
7.5
8.8%
169
Berkshire Hathaway / BRK.A
454,550.00
31
17,466.30
18,928.50
24.0
None
673
General Motors / GM
58.39
40
6.73
6.93
8.4
None
85
Hertz Global Holdings / HTZ
21.01
-22*
4.02
2.55
8.2
None
10
IBM / IBM
125.93
5
10.05
11.04
11.4
5.2
113
Johnson & Johnson / JNJ
173.01
10
9.83
10.38
16.7
2.5
455
Nordstrom / JWN**
20.05
-36
1.27
1.99
10.1
None
3
Royal Dutch Shell / RDS.B
42.82
27
4.86
6.19
6.9
3.9
166
Visa / V***
214.37
-2
5.91A
7.04
30.5
0.7
467

*Since July 1. **Estimates for Jan. 2022 and Jan. 2023 fiscal year ends. ***Sept. fiscal year end. E=estimate. A=actual.

Source: FactSet

Write to Andrew Bary at andrew.bary@barrons.com

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