Visa Inc. (NYSE:V) continues to deliver phenomenal shareholder returns year after year, and thus far 2018 is no exception. Over the past year, Visa has appreciated 45% and currently sits at a 52-week high. Visa has become a top-performing perineal large-cap growth stock that continues to deliver despite emerging threats in the digital payments space, blockchain technology and maturing markets in the traditional payments space leading to slower growth prospects. I’ve been reluctant to get behind the stock of Visa considering its valuation, slowing growth and trends away from the traditional credit card space among the younger demographics that embrace PayPal (PYPL) and PayPal’s Venmo for payment options and exchanging payments between multiple parties.
Furthermore, Amazon (AMZN) may be disrupting the credit card transaction space with its potential launch of Amazon financial services and Amazon Pay. Despite Visa’s massive move over the past year, growth has become worrisome and touched down to single digits before bouncing back to double digits over the last two quarters. I feel that shareholders have become overly enthusiastic about Visa’s growth prospects. The stock has appreciated over 45% during the past year, boasts a P/E of over 35 and a PEG of over 2.0 in the midst of a frothy market. This scenario doesn’t provide a great benefit-reward profile at these levels in my opinion. Continue reading "Visa: The Valuation Conundrum In A Frothy Market"