Buy something on plastic and your credit or debit card is almost certainly powered by either Visa (V:NYSE) or Mastercard (MC:NYSE) – they remain the giants in the electronic payments pool, dominating transactions globally.

Between them, the duopoly processes about 340 billion annual transactions with a value of around $18 trillion.

The company also enjoys some protection from inflation given it takes a small chunk of every transaction it processes. If the value of the transaction is higher due to surging prices, so is Visa’s cut.

Visa stock has been hit hard by the market selloff, but its earnings suggest that it has been hit too hard. For investors looking for quality at a reasonable price, Visa, we believe, is a great fit for ISA or SIPP portfolios.

Visa is the 10th largest company in the S&P 500, and is a mature, stable business at the sharp end of the hugely profitable payment processing business. Gross margins are 97.5%, operating and net profit margins are 67% and 51% respectively, vastly superior to sector averages.

Visa also scores highly on investment quality metrics. Return on equity is running at 44%, showing significant improvement on its 37% five-year average, while return on invested capital, a good way to measure operating performance, is 26.9%. The five-year average is 22.5%, so again showing improvement.

At current levels, the shares are back near levels they hit in early 2020, before supercharged growth in digital payments drove shares during the Covid-19 pandemic. Put it another way, the stock is still nearly 20% below levels of July 2021, despite posting record revenue and net income in each of the last two years.

According to consensus estimates from Investing.com, investors can expect double-digit average annual revenue growth out to full year September 2025, producing nearly 15% a year of average earnings increases.

You’ll also get regular dividends, paid quarterly. The yield is nothing to speak of, forecast at about 0.9% this year, but the payout is growing fast, about 40% last year.

Credit and debit card transactions may be its bread and butter, but Visa is expanding into new areas ripe for growth, such as open-banking initiatives.

It presents itself as a financial data champion through its US Spending Momentum Index, a new way to gauge the health of consumer spending, while it has also moved deeper into the cryptos space, launching its Global Crypto Advisory Practice in December 2021.

That’s a lot of scope for sustainable growth at a price to earnings multiple of just 25 this year, falling to 18.4 by 2025.

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