Wow. I guess my conversation about stock market volatility was better timed than I thought. As far as I can tell, some of the greatest companies in the world are now trading at 5% to 10% discounts to fair value. Diageo at $101. Hershey at $84. Coca-Cola at $36. Exxon at $69. Johnson & Johnson at $90. General Electric flirting with $22. Pick any of the above, hit the reinvest button, hold for a very long time, and you’ll be happy with the results.
However, the stock that has especially caught my attention is Visa. Out of all the companies in the Dow Jones, it has the greatest earnings per share growth characteristics. I think it would be quite difficult to come up with more than five other companies that are worth more than $150 billion that are growing revenues at a rate north of 10%. The balance sheet is perfect, and earnings per share growth is somewhere in the 12-15% range. Visa is exactly the kind of company that leads to significant increases in net worth when held for decades.
At the time of this writing, the stock has declined from $74 last Tuesday to a low of $60 today. Most of the loss happened during the pre-market trading, when the $71 share price on Friday fell to $65 right before the market opened less than twenty minutes ago.
I have no idea how long Visa will stay down, but this is a great opportunity to buy the best growth company in the S&P 500 at a fair price. There are about one or two dozen great opportunities to buy the highest caliber companies in the world at fair value right now, and I imagine that buying Visa today will deliver total returns in the 12% to 15% range over the coming ten to fifteen years. If you have recognized the greatness of Visa but have been concerned about its valuation, I would take advantage of buying this stock while the price hovers at $60. Over the long term, you should be well rewarded for your rationality amidst this mini-market panic.
Originally posted 2015-08-24 08:50:21.