When someone mentions Visa (V), credit and debit cards leap to mind. But we’re not talking about a card issuer that extends credit to consumers; rather, Visa just moves money around, explains Richard Moroney, editor of Dow Theory Forecasts.

And when you process somewhere around 600 million transactions a day, a lot of money is moving. Its transactional business model has generated consistent growth — both revenue and per-share profits up in 15 of the last 16 years.

Over the last five years, Visa grew sales at an annual rate of 10% and per-share profits at an annual rate of 17%. Over the last 10 years, Visa delivered annual growth of 11% in sales and 17% in per-share profits.

Not surprisingly, Visa grew nicely in the December quarter, with sales up 15% and per-share profits up 24% excluding currency fluctuations. Results topped Wall Street expectations, supported by an increase of 7% in payment volumes and a 10% rise in processed transactions.

Growth is slowing from the torrid post-pandemic pace. But we expect Visa to continue its "growthy" ways. The consensus calls for sales growth of 10% to 11% and profit growth of 13% to 14% over the next two years, targets that seem manageable — and beatable if the economy can avoid a recession.

Going forward, we see plenty of reasons for optimism regarding Visa. Here are three:

➤ As of late January, Visa said business trends were running strong and stable. This despite concerns about interest rates and the specter of a recession.

➤ China’s transaction volume has yet to recover to pre-Covid levels. Visa expects this trend to improve in coming months as travel picks up, providing a potential growth kicker.

➤ Visa joined the electronic-payments party early. But while digital payments now account for more volume than cash payments, we expect that share to keep rising. Statista projects an annual increase of nearly 14% in digital payments through 2027, and Visa stands to collect a lot of that volume.

No stock is truly bulletproof, but those that come close tend to catch the same ailment: rich valuations. The shares trade at 29 times trailing earnings and 27 times projected current-year earnings, topping the medians for data-processing companies by 64% and 59%, respectively. Visa’s price/earnings-to-growth (PEG) ratio of 1.7 is in line with peers.

While Visa is far from cheap, the stock trades 21% below its three-year norm based on trailing P/E ratio and also trades at a discount of 11% on price/operating cash flow. Sometimes you must pay a premium price to acquire premium growth.

Predicting long-term growth rates is always a risky business. But if you’re looking for a good bet to deliver annualized sales growth of more than 8% and profit growth of more than 15% over the next decade, few companies have a better chance than Visa.

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