Image Source: Visa Inc – Second Quarter of Fiscal 2022 IR Earnings Presentation.
The payment processing and payment solutions space is attractive. Companies operating in this industry have asset-light business models with relatively modest capital expenditure requirements to maintain a given level of revenues, making free cash flows easier to come by. Additionally, the industry’s growth outlook is incredibly bright and supported by secular tailwinds as the world continues to shift away from cash and towards other payment options (card, mobile apps, QR codes, online payment platforms). Our two favorite companies in this space are PayPal Holdings and Visa, and we include both as ideas in the Best Ideas Newsletter portfolio. Online spending levels remain robust even as the worst of the coronavirus (‘COVID-19’) pandemic fades and households resume outdoor activities, while global travel activities are resuming in earnest as the economy opens back up. PayPal and Visa both recently updated investors on their financial standing and outlook, and overall, we liked what we saw.
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