We recently published a list of 10 Best Blue Chip Stocks to Buy for 2025. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other best blue chip stocks to buy for 2025.
Both conservative and risk-tolerant investors favor blue chip stocks due to their solid business models, impressive track records, and attractive risk-reward profiles. These stocks are backed by companies with strong brand names and reputations that generate dependable earnings and consistent dividends, which provide stability and passive income during turbulent market conditions.
In recent years, Wall Street has become reliant on the best blue chip stocks. While the S&P 500 was up by about 24% in 2024, most of the gains were driven by gains in seven of the biggest blue chip stocks. The “Magnificent 7” stocks, which include seven of the biggest companies by market cap, accounted for a 13.7% point gain in the S&P 500. Therefore, investors who focused on these stocks ended up generating significant gains.
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The trend is not expected to change in 2025. Blue chip companies should be the biggest beneficiary as the Federal Reserve cuts interest rates and the new administration under Donald Trump pushes for fewer regulations. The easing of regulatory pressure that has taken a significant toll on tech giants should be a boon to see blue chip stocks edge even higher. David Miller, co-founder at Catalyst Funds, expects blue chip stocks to continue leading the way in 2025.
“The Mag 7 stocks are generating significant growth in terms of revenue and earnings power,” he said earlier this month. “These companies are massive monopoly businesses with strong fundamental tail winds. I have no reason to believe that the Mag 7 names won’t continue to dominate the S&P in 2025.”
Valuations among the blue-chip stocks have gotten out of hand after two years of blockbuster gains amid the artificial intelligence frenzy. Blue chip companies boast significant profits and a competitive edge to back their valuations up, however.
“The Magnificent Seven are not pie-in-the-sky companies: They’re generating “tremendous” revenue for investors”, said Fitzgerald, principal and founding member of Moisand Fitzgerald Tamayo. “How much more gain can be made is the question,” he added.
Therefore, any well-diversified investment portfolio should include some of the best blue chip stocks. It’s the only way investors can take advantage of the market rally that’s driven by various factors, including the artificial intelligence frenzy, robust economic growth and friendly monetary policy.
Our Methodology
To make our list of the 10 best blue chip stocks to buy for 2025, we analyzed the market, focusing on large market cap companies (more than $100 billion) with well-established, financially sound businesses. We then examined their performance over the past year, focusing on the underlying fundamentals that make them stand out. Finally, we ranked these companies in ascending order based on their 12-month return in 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a credit card being swiped on a payment terminal, reflecting the company’s payments technology.
Visa Inc. (NYSE:V)
Market Cap as of January 8: $605.34 Billion
Past Year Gain (2024): 19%
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a payment technology company that offers VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. While the company operates in a highly cyclical sector susceptible to varying economic conditions, its stock has remained resilient.
The competitive edge stems from the company’s focus on payment facilitation and operating the world’s biggest credit card network. It collaborates with 14,500 financial institution partners and powers 4.5 billion cards globally. The massive network allowed the company to process almost $16 trillion in payments last year.
Visa Inc. (NYSE:V) generates significant revenues in fees regardless of prevailing economic conditions. In contrast, its other peers that engage in lending suffer immensely during recessions on having to cover for loan losses and delinquencies. Additionally, Visa’s edge stems from expanding its footprint across the globe. It remains one of the best blue chip stocks to buy, as the company has enjoyed sustained double-digit growth in cross-border volume in emerging markets.
Since going public in 2008, the company has distributed dividends. It currently distributes a quarterly dividend of $0.52 per share, translating to a 0.73% yield. Although the yield might not seem impressive, Visa Inc. (NYSE:V) has a solid dividend-raising history, 15 years and counting.
Montaka Global Investments stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“Montaka owns several duopolists in the financial services industry, including Visa Inc. (NYSE:V) and Mastercard in payments; and S&P Global in credit ratings and financial data services. These businesses have competitively protected and reliably growing core businesses. But they also have newer, high-probability adjacent opportunities. The market, however, is underappreciating this powerful combination, in our view.
For Visa and Mastercard, their core businesses in global payment processing are being complemented by significant growth in two areas:
New processing opportunities in peer-to-peer, business-to-business, business-to-consumer, and government-to-consumer payments; and
Value-added services, including risk, fraud-detection, issuance, acceptance, and open banking.”
Overall, V ranks 9th on our list of best blue chip stocks to buy for 2025. While we acknowledge the potential of V as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.