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Back in November of last year, my colleague Jimmy Butts told readers about the release of our flagship investment report: The Top Stocks For 2018. (He also gave away one of the top 10 picks -- technology giant Cisco -- which is up more than 17% since the reveal.)
This is probably the most important piece of research we put out all year. One of the reasons is that we're brutally honest with our readers in this report. It tells investors what they NEED to hear, not necessarily what they want to hear.
I think our readers appreciate this kind of frankness -- it's what keeps them coming back year after year. They know that the principles undergirding this report stand the test of time. Because the truth is, successful investing doesn't have to be overly complicated.
Think about it...
What do companies like Coca-Cola (NYSE: KO), Campbell's Soup (NYSE: CPB) and Deere & Co. (NYSE: DE) all have in common?
You might think not much. But think for a moment about some of the absolute chaos that has happened in the 20th century, not to mention this nascent 21st. There was World War I, World War II, Vietnam, etc. You had the Great Depression, the Oil embargo, the tech bubble, the global financial crisis... There were pandemics, assassinations, terror attacks... the list goes on.
Yet somehow, every single one of these household names has not only survived -- but prospered in ways that have rewarded countless shareholders with fortunes over the years, while tens of thousands of business have come and gone.
The reasons for this are simple. Our research has found that stocks that deliver fantastic long-term gains tend to share a few simple characteristics...
-- They enjoy huge, long-term, advantages over their competition
-- They produce goods and services necessary for everyday life
-- They pay investors by growing dividends or buying back massive amounts of their own stock.
And it's led to fantastic results. Just take a look at some of the gains delivered by picks from this report using these guiding principles in years past...
Now, as I mentioned, Jimmy shared one of the picks from this year's report back in that November issue. We couldn't reveal all 10 of course -- after all, it takes a considerable expense of both hours and dollars putting together a comprehensive report of this nature together.
But we do offer this report for free to subscribers who sign up for a trial run of our premium newsletter, Top Stock Advisor. Regardless of whether you decide Top Stock Advisor is right for you or not, the report is yours to keep. But since the same team that puts together this report is behind the newsletter, we think you will.
Now, having said all that, I think enough time has passed that I won't feel too guilty sharing another pick with you today.
This is another pick you'll recognize (remember, in November we said you would recognize some of these names more than others) -- but that's not the point. After reading a bit of our analysis on why we think this stock is a must-own for just about every investor, we think you'll agree.
Top Stock #3 Revealed
You're undoubtedly familiar with Visa (NYSE: V). The massive global payment network dominates the market for electronic payments, accounting for roughly half of all credit card transactions and nearly three-fourths of debit card transactions.
The company operates on an "open-loop" network, which differs from "closed-loop" networks like American Express (NYSE: AXP). The biggest difference is that Visa doesn't issue cards or have anything to do with the debt that consumers put on their credit cards. Visa simply earns a small percentage of each transaction that users make on one of its branded cards.
Don't get bogged down in the details of the two network types, but it is important to get a basic understanding of them. In short, companies that operate on an open-loop network generate revenue by charging data processing and service fees from financial institutions and merchants who use their card and network. They do not issue cards themselves and are not involved in the lending process. On the other hand, a closed-loop network (like American Express) issues cards and derives the majority of its revenue from the fee charged to merchants who accept its cards. They also earn interest on loans issued to cardholders and get revenue from membership fees.
This means Visa doesn't have to worry about whether a consumer is going to pay their credit card bill; it simply acts as a toll operator. It generates revenue by charging fees to banks (who issue cards that carry its brand) and to the financial institutions of the merchants (who use and operate on Visa's network). In other words, Visa earns a small percentage on each transaction that users make on its card or network.
This toll operator business model allows Visa to boast some of the thickest profit margins of any business. Its operating margin currently stands at 67%, besting its biggest competitor, MasterCard (NYSE: MA), whose profit margins sit at 54%. Based on our latest research, that's more profitable than 98% of all companies in the S&P 500.
In the last 12 months, Visa collected about $12 billion in revenue, with a growing portion of that coming from outside the United States. Quarterly revenue was up 18% compared with the same period last year -- a staggering jump for such a large company. Earnings, meanwhile, were up more than 20% last quarter.
It's no wonder then, that shares have gained more than 50% in the past year, compared with a 23.5% gain for the S&P 500. It just goes to show that even in what's been a record-setting year for stocks, you don't have to search for an unknown small-cap stock to beat the market.
We have no doubt that Visa will continue to see this sort of success as more and more people turn to electronic forms of payment and away from cash. Visa is a global brand that dominates its market, and right now investors have a prime opportunity to add this world-class company to the portfolio and take a cut out from one out of every two retail purchases in the United States.
Want More? Check Out The Full Report
Remember, this is just one pick out of 10. Some of the other picks in our Top Stocks For 2018 report will be less familiar to you. And while Visa is a household name that's already delivered fantastic gains (Top Stock Advisor readers are up 57.5% in just a year and change), I think long-term investors are going to be very pleased with what they see from this stock in 2018 and beyond.
You'll find all the details of every one of our 10 picks in our brand-new report. We'd like to share it with you, with absolutely no risk on your end. All we ask is that you sign up for a no obligation trial membership to our monthly service, Top Stock Advisor, just to see if you like it (even if you don't, you can keep the report as a free gift). Follow this link to learn more.
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