It is hard to find a more consistent company than Visa (V); payments volume grew 11% in its fourth fiscal quarter ended September 30, 2018 and an identical 11% for the fiscal year, observes Doug Gerlach, editor of Investor Advisory Service.

Cross-border volume was up 10% both for the quarter and the year. The number of processed transactions rose 12% in both the quarter and the year. The P/E isn’t low, but the consistent, high-quality growth puts Visa in the category of “expensive, but worth it.”

Visa is, of course, the operator of the credit and debit card network of the same name. It also operates the Visa/Plus ATM Network and Interlink debit card system. Visa has more than 50% of the global volume in credit and debit cards.

Visa’s high operating margin and strong cash flow are a source of tremendous appeal. Its pre-tax profit margin is consistently well into the 60s. Pre-tax profits in fiscal 2018 were 65% of revenue. Free cash flow was 58% of revenue.

Visa is more than just a company that process credit card and debit card transactions. It works hard to play in the future where disruptive technologies could harm its business. It buys stakes in emerging private companies in the payments space. Others become strategic partners like PayPal (PYPL), Square (SQ) and Stripe.

Visa also innovates on its own. One example is Visa Direct, which uses the Visa payments network to allow individuals and businesses to move money between cards and bank accounts in real time. This is a way to interrupt potential disruptors like Venmo and Zelle.

We are forecasting five-year EPS growth of 16%. These projections are consistent with Visa’s recent guidance for low double-digit revenue growth and a mid-teens EPS increase in the new fiscal year.

At the end of five years, EPS could be about $9.28. A repeat of the average high P/E of 30.1 could lead to a stock price of $279. Adding in a small dividend, the potential annual return could exceed 15%.

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