2 Wide-Moat Stocks Trading Less Than 10% Below Their 52-Week Highs: Can They Double a $10,000 Investment in 5 Years?

When businesses have been great for so long by doing the same things that they've always done, the investment community can start taking them for granted. This might be the case with Visa (NYSE: V) and Mastercard (NYSE: MA).

They are undeniably two of the most remarkable companies on the face of the planet. And anytime their share prices dip, which can happen for any reason, investors would do well to examine these businesses more closely.

These two wide-moat stocks are each trading at less than 10% below their 52-week highs (as of Sept. 18). If you invest $5,000 in equal weights between Visa and Mastercard right now, will that allocation double in five years?

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Two topics on investors' minds

Taking a step back first, I believe it's important for prospective shareholders to understand the points of concern regarding these companies. I believe there are two key risks that have become more prominent this year.

The first relates to the artificial intelligence revolution. Doomsday believers think that this technology will eventually replace all white-collar workers. And in doing so, consumers' buying power will take a hit, harming the payment volumes that Visa and Mastercard handle.

Disruption is another threat, although this is always the case. Stablecoins have been one of the hottest trends in the cryptocurrency and blockchain sector. Visa and Mastercard are leaning in aggressively to develop and integrate this technology. However, the bears are convinced that credit card usage will decline dramatically as consumers adopt stablecoin transactions in their daily lives.

Don't downplay these positive attributes

These risks are overblown. Visa and Mastercard have navigated technological changes in the past. They continue to be among the most successful companies the world has ever seen. Each business possesses three remarkable characteristics that make it a worthy investment.

Both Visa and Mastercard have robust network effects. Each has billions of cards on one side that connect to hundreds of millions of merchant acceptance locations. It would be virtually impossible to disrupt this setup that is so entrenched in how commerce is done.

They're unbelievably profitable. Visa's operating margin through the first nine months of fiscal 2026 was a reported 61.5%. At 60.2%, Mastercard's operating margin last quarter was also superb.

And they benefit from sustainable growth opportunities. The global economy continues to expand, leading to higher spending over time. Cash and paper usage are in decline. Moreover, Visa and Mastercard have budding value-added services segments that are driving growth and diversifying their revenue streams.

Hitting a double is possible, but it might be unlikely

Assuming the valuations that these financial stocks trade at remain constant, diluted earnings per share (EPS) would need to grow by 100% over the next five years for investors to capture a double. Based on historical trends, this is a very realistic outcome.

Visa's diluted EPS rose by 152% from Q3 2021 to Q3 2026. Mastercard's diluted EPS was up 139% in the last five years. Even if these companies saw their profit growth decelerate, which is a reasonable assumption to have, they could still double their earnings.

But the counterargument is that these stocks have underperformed the market. In the past five years, Visa and Mastercard have seen their share prices rise 67% and 65%, respectively. The S&P 500 index climbed 72% during that time. Maybe this is the new normal.

Valuation will also play a part. These stocks aren't cheap. They both trade at price-to-earnings multiples above 31. Investors shouldn't rely on valuation upside. In fact, these ratios could contract in the future.

If you're willing to lower expectations and still be satisfied if Visa and Mastercard don't double a $10,000 investment between now and 2031, then it's still worth considering these elite businesses for your portfolio. Owning them could help you sleep well at night.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.