Topic: Growth Stocks

VISA INC. $246 – New York symbol V

VISA INC. $246 (New York symbol V; Conservative Growth Portfolio, Finance sector; Shares outstanding: 618.3 million; Market cap: $152.1 billion; Price-to-sales ratio: 12.5; Dividend yield: 0.8%; TSINetwork Rating: Above Average; gets most of its revenue from fees it charges card issuers and merchants for using its network. It bases its fees on payment volume and transactions processed, among other factors. The banks that issue the cards are responsible for evaluating customer creditworthiness and collecting payments, not Visa.

The company continues to profit as more people shop online, and debit cards are quickly replacing cash for smaller transactions.

Meanwhile, the U.S. Supreme Court recently refused to hear an appeal of a class-action lawsuit by retailers seeking to lower the fees credit card companies charge. That cuts Visa’s risk.

Visa is a buy.

GOOGLE INC. (Nasdaq symbols GOOG $510 (class C: non-voting) and GOOGL $512 (class A: one vote per share); Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 678.4 million; Market cap: $347.3 billion; Price-tosales ratio: 5.2; No dividends paid; TSINetwork Rating: Above Average; continues to dominate two fast growing businesses: Internet search and mobile devices.

The company is using its strong cash flows to invest in several new growth projects.

It recently acquired roughly 5% of SpaceX, which builds and launches rockets and spacecraft. This investment will help with Google’s long-term plan to deliver Internet services through satellites and high-altitude balloons. That would expand Web access to more parts of the world, giving the company more opportunities to sell online ads related to its web search and other services.

Shareholders should continue to hold their class A shares, but we recommend the cheaper class C stock for new buying.

Google is a buy.


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