What Makes Visa (V) Stock A Steady Earnings Compounder?

Investment advisory firm Ithaka Group released the “Ithaka US Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Following two years of gains exceeding 25%, the markets welcomed the new year with considerable volatility and a sharp decline. In the first quarter, Ithaka's portfolio underperformed the R1000G by 30 basis points, recording -10.3% to -10.0% (gross of fees) amid a negative market environment. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Ithaka US Growth Strategy highlighted stocks such as Visa Inc. (NYSE:V). Visa Inc. (NYSE:V) is a payment technology company. The one-month return of Visa Inc. (NYSE:V) was -2.55%, and its shares gained 25.65% of their value over the last 52 weeks. On April 28, 2025, Visa Inc. (NYSE:V) stock closed at $337.51 per share with a market capitalization of $659.35 billion.

Ithaka US Growth Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q1 2025 investor letter:

"Visa Inc. (NYSE:V) is one of two leading companies (along with MasterCard) that helps share information and transfer funds between banks that have relationships with card-carrying consumers and banks that have relationships with merchants, ensuring payment transactions are reliable and secure. Since the company’s founding in 1958, Visa has been benefiting from growth in personal consumption expenditure, a strong secular shift from cash and checks to credit and debit cards, and an asset-light, high-margin business model that generates strong free cash flow and resilient earnings, even in volatile macro environments. In the first quarter Visa saw its stock trade up in a tumultuous market tape, as investors tend to flock to more steady earning compounders, of which Visa is an ideal candidate."

Visa Inc. (NYSE:V) is in 6th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 181 hedge fund portfolios held Visa Inc. (NYSE:V) at the end of the fourth quarter which was 165 in the previous quarter. Visa Inc. (NYSE:V) had a strong start to fiscal year 2025 with $9.5 billion in net revenue, up 10% year-over-year, and a 14% increase in EPS. While we acknowledge the potential of Visa Inc. (NYSE: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered The Visa Inc. (NYSE:V) and shared the list of most profitable blue-chip stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.