There are few businesses quite like Visa. This perpetually expensive company trades at a high earnings multiple for a reason: they simply are a cash cow. Over the last 3 years Visa has been able to generate a 43% cash flow margin. A simply fantastic result!
As credit card purchases continue to eat away at global transaction market share, Visa (and Mastercard (NYSE: MA)), stand poised to continue to grow uncontested. What these two companies have that make them unique is their already established network. These two companies have the widest global reach and adoption by banks, vendors and consumers. This network would be extremely hard to replicate, making barriers of entry very high.
This large, established network is the type of unique asset that should be able to stand the test of time and continue to generate out-sized cash flow. Visa and Mastercard, will likely never be cheap companies, but nonetheless, they still deserve a position as core holdings in the portfolios of smart, long-term investors.