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Growth Opportunities Justify Buying Visa Despite Its Relatively High Valuation

Visa (NYSE:V) has been a stable stock during 2015, although it had to bear the brunt of a global equity sell-off over the last couple of months. During this time, the stock declined by around 9% from its peak near July end. Despite that, V along with MasterCard (NYSE:MA), its major global competitor, has been able to garner a relatively higher valuation compared to smaller players such as American Express (NYSE:AXP). At the current price levels, V has a P/E of 27.91 - more than double AXP's P/E of 13.26 and marginally lower than MA's P/E of 28.05. Even in terms of P/S, V and MA are currently valued more by investors compared to AXP. While V has a P/S of 12.34, MA and AXP have P/S of 11.12 and 2.11, respectively. Looking at the future earning potential, it seems that V would lag behind MA and AXP. As of now, estimates for 2016 EPS for V, MA and AXP stand at $2.78, $3.83, and $5.76, respectively... READ MORE

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