High Margins, 39% Discount: Buy Visa Stock Now

Visa (V) stock might be a good buy now. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Companies like this generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. The market tends to reward that.

What Is Happening With V

V is up 3.2% so far this year, but is actually 39% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago.

Here is what’s going well for the company. Fiscal 2025 saw net revenue rise 11%, powered by 13% growth in high-margin cross-border transaction volume and a 10% increase in processed transactions, signaling strong payment adoption. Strategic investments in AI-driven fraud detection and Visa Direct’s 28% transaction growth further enhance value and revenue streams. For Q1 2026, guidance projects net revenue growth at the high end of low double digits. Visa’s year-to-date return is 3.29%.

V Has Strong Fundamentals

• Recent Profitability: Nearly 57.6% operating cash flow margin and 66.4% operating margin LTM.
• Long-Term Profitability: About 58.9% operating cash flow margin and 66.8% operating margin last 3-year average.
• Revenue Growth: Visa saw growth of 11.3% LTM and 10.9% last 3-year average, but this is not a growth story
• Available At Discount: At P/S multiple of 10.5, V stock is available at a 39% discount vs 1 year ago.

Below is a quick comparison of V fundamentals with S&P medians.

*LTM: Last Twelve Months

Don’t Expect A Slam Dunk, Though

While V stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Stock V isn’t immune to rough patches either. It fell about 52% during the Global Financial Crisis, took a 36% hit in the Covid downturn, and dropped nearly 29% in the inflation shock of 2022. Even the 2018 correction pushed it down nearly 19%. So, while it might seem solid on paper, these dips show it can still suffer along with the broader market when things get shaky. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read V Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want more details, read Buy or Sell V Stock.

How We Arrived At V Stock

V piqued our interest because it meets the following criteria:

1. Greater than $10 Bil in market cap
2. High CFO (cash flow from operations) margins or operating margins
3. Meaningfully declined in valuation over the past 1 year

But if V doesn’t look good enough to you, here are other stocks that also check all these boxes:

1. Salesforce (CRM)
2. ServiceNow (NOW)
3. Texas Instruments (TXN)

Notably, a portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 19%
• 12-month win rate (percentage of picks returning positive) of about 72%

Portfolios Win When Stock Picks Fall Short

Single stocks swing wildly but staying invested matters. A well built portfolio keeps you invested, captures upside and softens the blows from individual stocks

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.