We recently published an article titled, Jim Cramer on Netflix and Other Stocks. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other stocks discussed by Jim Cramer.
Recently, Mad Money’s host, Jim Cramer addressed what he called a “ridiculous plethora of sell-side downgrades,” noting that the Dow Jones Industrial Average fell by 0.94%, the S&P 500 decreased by 0.96%, and the Nasdaq Composite dropped by 1.18% on Monday. While he acknowledged the session’s poor performance, he cautioned that paying too much attention to downgrades can be detrimental for long-term investors.
Cramer urged investors not to get overly influenced by the negative sentiment on Wall Street and emphasized the importance of staying committed to strong companies, even when their stock prices experience volatility. He recounted the history of the bull market, stating:
“When I look at the history of this incredible bull market, and it has been an incredible bull market, it’s littered with buy-to-hold, hold-to-sell, buy-to-hold, hold-to-sell. These downgrades scare you out of amazing stocks at levels that may temporarily be too high, but will recover later. If you listen to the downgrades, though, you’ll never recover with it.”
In discussing the challenges investors face, Cramer pointed out that many get rattled by analyst downgrades and might sell their shares in solid companies, which can make it difficult to buy back in later.
“In the last decade, the toughest thing to do is to hold on to good stocks. But analysts and commentators love to take aim at big long-term winners. Their jeremiads have scared so many people out of some amazing gains.”
He observed that complacency can be prevalent on Wall Street, with bullish investors often overlooking risks while bearish ones miss out on potential opportunities. For those considering action based on a downgrade, Cramer advised waiting for a bounce to sell, but he noted that timing such moves is “incredibly hard,” even for seasoned traders.
Cramer emphasized that when analysts downgrade stocks that have already taken a hit and overlook positive aspects, it can create a challenging environment. However, he believes it is still possible to profit. Here’s what he said:
“I need you to understand that when analysts downgrade after stocks have already been hammered, when really good investors ignore the positives, then, it may be a grim time. But not so grim that we can’t make money by focusing on the fundamentals of the companies. And not just the economy, the Fed, interest rates and oil.”
Our Methodology
For this article, we compiled a list of 15 stocks that were mentioned by Jim Cramer during his episodes of Mad Money on October 7 and October 8. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Cramer Calls Visa Inc. (NYSE:V) ‘A Great Long-Term Stock’
Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a well-known name in the global payment technology industry, operating extensively in both the United States and abroad. When a caller inquired about increasing their position in the stock, Cramer highlighted that its current valuation at 27 times earnings makes it prudent to wait for a better buying opportunity. He affirmed that the stock is a solid long-term investment and said:
“… Look, it sells at 27 times earnings. I’m waiting for Visa to come down at a discount. You don’t have that. Right now, I have to tell you, Mastercard is actually doing a little better than Visa. But no, no need to add a position on that. That’s not the right basis. Just keep looking. It’s a great long-term stock and I think it always will be as long as this is well run as it is now.”
Visa (NYSE:V) holds a significant portion of the U.S. credit card market. The market dominance is seen in the vast scale of operations, with more than 4 billion active credit and debit cards linked to its network. Over the past year, the company processed an astounding payment volume exceeding $3 trillion, evidence of its critical role in the financial ecosystem.
On September 26, Visa (NYSE:V) announced that it entered into a definitive agreement to acquire Featurespace, a company specializing in real-time AI solutions aimed at preventing payment fraud and mitigating financial crime risks.
The acquisition is set to advance its existing suite of fraud detection and risk-scoring tools that serve clients globally. By integrating Featurespace’s expertise, the company wishes to increase its capability to address fraud in real-time, and eventually provide added protection to the payments ecosystem through innovative AI-driven approaches.
The company’s commitment to security and technology investment is evident, with billions of dollars allocated over the past five years to improve its infrastructure against fraud and network security. The transaction, expected to finalize in fiscal year 2025, is expected to offer considerable advantages to financial institutions, consumers, and the broader payments industry.
Aoris Investment Management stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
Overall, V ranks 3rd on our list of stocks discussed by Jim Cramer. While we acknowledge the potential of V as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
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