This 'high quality' credit card stock has earned its place in the portfolio, strategist says

EP Wealth Advisors' Adam Phillips recommends Visa and Waste Management as strong portfolio additions, citing their defensive qualities and growth potential. He highlights Visa's robust free cash flow, effective duopoly, and resilience in a healthy economic environment, noting its 11% year-to-date gain. Phillips also favors Waste Management for its non-cyclical nature, consistent revenue and earnings growth, and downside protection, with its shares similarly up over 11% year-to-date.

Analysis

An analyst from EP Wealth Advisors has presented a bullish case for both Visa (V) and Waste Management (WM), positioning them as strong portfolio additions based on distinct investment theses. Visa is framed as a high-quality play on a resilient macroeconomic backdrop, with its stock having gained approximately 11% year-to-date, slightly outpacing the S&P 500. The rationale is anchored in its integral role in consumer consumption, its formidable market position within an "effective duopoly" alongside Mastercard, and its significant free cash flow generation. In contrast, Waste Management is recommended for its defensive qualities, offering "downside protection" due to its non-cyclical business model. Despite its perceived lack of excitement compared to sectors like AI, WM's stock has also appreciated over 11% year-to-date, driven by what the analyst calls "healthy revenue growth and earnings growth," making it an attractive diversifier.

Key Decisions for Investors

• Investors with a constructive view on consumer spending and the broader economy should consider Visa (V) for its market leadership, strong cash-flow profile, and direct participation in economic activity.
• For portfolios seeking to add a defensive component without sacrificing growth, Waste Management (WM) presents a compelling non-cyclical option that has demonstrated an ability to expand revenue and earnings.
• The analysis suggests a potential barbell strategy, pairing a high-quality cyclical leader like Visa with a defensive compounder like Waste Management to balance exposure to economic upside with portfolio resilience.