Geopolitical concerns, rising inflation, and interest rate hikes weighed heavily on investors’ sentiments, resulting in substantial volatility in the stock market.

Although the stock market may continue to be under pressure in the short term, investors should consider buying Visa Inc. (V) and Canadian National Railway Company (CNI). Billionaire Chris Hohn is a notable stakeholder in V and CNI.

The Federal Reserve of the United States has hiked interest rates, despite concerns that the move may exacerbate financial upheaval following a string of bank collapses. The Federal Reserve raised the interest rate by 0.25 percentage points, describing the financial sector as “sound and resilient.”

However, according to the Federal Reserve documents published on Wednesday, the impact of the U.S. banking crisis are expected to cause the economy to enter a recession later this year.

Additionally, according to the Conference Boards’ probability model, most recent estimations of the possibility of a recession in the US occurring within the next 12 months remain close to 99 percent.

Despite the uncertainties ahead, Chris Hohn’s holdings, V and CNI, could be poised to deliver stable returns.

Visa Inc. (V)

V is a leading payments technology company that facilitates digital payments among consumers, merchants, financial institutions, strategic partners, businesses, and government entities. In addition, it provides card products, platforms, and value-added services. The company offers its products and services under Visa, Visa Electron, Interlink, VPAY, and PLUS brands.

On April 11, 2023, V announced a collaboration with PayPal and Venmo to launch Visa+, an innovative solution designed to enable people move money quickly and securely between different person-to-person (P2P) digital payment platforms. Venmo and PayPal customers in the United States will be able to transfer money smoothly between the two systems later this year.

V has paid dividends for 14 consecutive years. Over the last three years, V’s dividend payouts have grown at a 14.5% CAGR. While V’s four-year average dividend yield is 0.62%, its current dividend translates to a 0.79% yield.

V’s net revenues came in at $7.94 billion for the first quarter that ended December 31, 2022, up 12.4% year-over-year. Its operating income came in at $5.10 billion, up 6.6% year-over-year, while its non-GAAP net income increased 17.4% year-over-year to $4.58 billion. The company’s non-GAAP EPS came in at $2.18, up 20.4% year-over-year.

V’s revenue is expected to increase by 10.4% year-over-year to $32.36 billion in 2023. Its EPS is expected to grow 12.8% year-over-year to $8.46 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 27.8% to close the last trading session at $229.24.

V’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

V has an A grade for Quality and a B for Sentiment and Stability. Within the Consumer Financial Services industry, it is ranked #2 out of 46 stocks. Click here to access the additional POWR Ratings for V (Value, Momentum, and Growth).

Canadian National Railway Company (CNI)

Headquartered in Montreal, Canada, CNI is engaged in the rail and related transportation business. Its services include rail, intermodal, trucking, and supply chain services. Further, the company operates a network of 20,000 route miles of track and shipping in Canada and the United States.

On March 27, 2023, CNI, Trealmont Transport Inc. (Montship Inc.), and Kaptan US LLC have agreed to construct a multimodal transload facility in CN’s Calgary Logistics Park. The new facility is expected to be operational by the third quarter of 2024.

“We are extremely happy to partner with Montship and Kaptan and welcome them to CN’s Logistics Park in Calgary. This new facility will provide value to our customers and the regional economy by leveraging CN’s robust network and two options to Asian markets via the Ports of Vancouver and Prince Rupert,” said Dan Bresolin, Vice-President, Intermodal, CN.

Over the last three years, CNI’s dividend payouts have grown at an 11.2% CAGR. While CNI’s four-year average dividend yield is 1.62%, its current dividend translates to a 1.90% yield.

In the fiscal fourth quarter that ended on December 31, 2022. CNI’s total revenue increased 21% year-over-year to C$4.54 billion ($3.35 billion). Its adjusted operating income increased 21.1% year-over-year to C$1.91 billion ($1.41 billion).

The company’s adjusted net income and adjusted EPS came in at C$1.42 billion ($1.05 billion) and C$2.10, up 17.3% and 22.8% year-over-year, respectively.

Street expects CNI’s revenue to increase 4.7% year-over-year to $13.05 billion in 2023. Its EPS is expected to increase 6.4% year-over-year to $5.78 in the same period. It surpassed the EPS estimates in three of the four trailing quarters. The stock has gained 12.9% over the past six months to close the last trading session at $121.32.

It’s no surprise that CNI has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Stability, Momentum, and Quality. It is ranked #3 out of 15 stocks in the B-rated Railroads industry.

Beyond what is stated above, we’ve also rated CNI for Growth, Sentiment, and Value. Get all CNI ratings here.

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V shares were trading at $231.61 per share on Thursday afternoon, up $3.80 (+1.67%). Year-to-date, V has gained 11.70%, versus a 8.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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