Despite a very rough year so far, payment processor Visa (V, news)is right there beside Apple, with gains of roughly 30% since the first of the year. Visa stock continues to set 52-week highs and is within striking distance of new all-time highs.
Visa doesn't have quite the track record of many blue chips, having gone public in 2008. However, there are some big reasons to expect that the recent growth is not just a flash in the pan.
For starters, the percentage of cashless transactions continues to rise. Despite rapid growth from fees for payment processing, 40% of all transactions in the U.S. still are done with cash or paper checks. That's to say nothing of rapid growth of the credit and debit card businesses in emerging markets. Visa's logo is everywhere, and plastic will only be accepted in more places as the months go by.
And don't forget, Visa is not a financial stock. Service fees account for more than one-third of revenue -- meaning the stock is little more than a toll-taker on the road between a merchant and a customer's checking account. It is not exposed to bad debt the way financial stocks like Bank of America (BAC, news)are.
Visa has seen year-over-year earnings growth every single quarter since going public, and it should keep up that growth. Additionally, revenue was up 17% from fiscal 2009 to fiscal 2010 and is forecast to jump 12% in fiscal 2011.
There is big growth to be had at Visa. It might not be Apple, but its strong growth potential and dominant brand make it a go-to stock for large-cap investors.
Editor's note: This story was updated Oct. 30 to reflect recent earnings reports.
Jeff Reeves is editor of InvestorPlace. As of this writing, he did not own a position in any of the stock mentioned in this article. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
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