The matchup between Visa Inc (NYSE:V) and CVS Health Corp (NYSE:CVS) pits the world’s largest payments processor against a fast growing pharmacy benefits manager. A diversified portfolio would do well to house both these names, but one does indeed look a bit better than the other.

The fundamentals driving both stocks are solid and secular. There’s nothing trendy or sexy about the way these companies generate growth, but you can bet the growth will keep coming.

That is thanks to macroeconomic and demographic factors, but these stocks have other things going for them as well.

For one thing, management effectiveness looks good. High returns on equity in their respective industries reveals attests to that, an makes the case for Visa and CVS being high-quality stocks.

As for track records, both Visa and CVS have absolutely crushed the S&P 500 over the course of the six-year bull market. Visa and CVS have also handily outperformed their nearest competitors since the bear-market bottom of March 2009.

Most importantly, Visa and CVS have above-average growth rates. Wall Street analysts see CVS generating a long-term growth rate of 15%. Visa’s long-term growth rate is pegged at 17%.

However, one of these stocks appears to have an edge based on valuation. Let’s have a look.

Visa (V)

As we’ve said before, Visa has new growth opportunities cropping up all the time. Tech companies are stumbling over themselves to roll out mobile payment systems. Think Apple Inc.’s (AAPL) Apple Pay. Every time a new system debuts, Visa wins.

That gets to the heart of the great secular tailwind Visa has at its back. An increasingly digital world creates demand for credit- and debit-card transactions, and that gives Visa an amazing growth rate for a mega-cap company.

The stock does, however, have a few blemishes.

Visa’s long-term growth rate might justify paying a premium for its stock, but the valuation is still suspect. V stock trades well above its own five-year average on a trailing and forward earnings basis. Visa also significantly more expensive than peers by these measures. It’s even pricier than the S&P 500, which isn’t all that cheap these days.

Valuation reverts to the mean over time, which means any fresh capital committed to Visa at current levels will likely underperform given enough time.

CVS Health (CVS)

CVS has its own secular tailwinds, we’ve noted, and they really can’t be beat. As both a pharmacy and pharmacy benefits manager, CVS has two tremendous macroeconomic and demographic forces helping it.

The baby boomers are just entering their retirement years, driving increased demand for pharmacy services. At the same time, the Affordable Care Act is creating millions of new healthcare customers.

True, in the short term, CVS could be held back by the Republican challenge to Obamacare. After all, the market hates uncertainty. That’s the wildcard here over the next few months. But even if the Affordable Care Act is dealt a setback, CVS still has a secular tailwind with the boomers.

Happily, shares still trade at a valuation that should deliver good long-term gains. At less than 18 times forward earnings, CVS stock is significantly cheaper than the broader market at a time when cheap stocks are hard to come by. True, the valuation is higher than its own five-year average, but then growth is accelerated vs that period. That justifies at least some multiple expansion.

Our Quarterfinal Pick: CVS

This is a tough one. One of the big things Visa has over CVS is that it doesn’t have a massive retail business attached. That’s expensive to run, there’s intense competition and results can fluctuate with everything from a dud of a front-of-store promotion to the weather.

CVS, however, offers a more compelling valuation. Sentiment also appears to favor CVS. Neither stock is being targeted by short sellers, which is reassuring, especially when these names have put up such solid gains.

But CVS does have the edge by this measure, with a negligible 1.2% of the float sold short. With Visa, nearly 3% of the float is sold short.

It’s only a slight advantage, but when two stocks are as promising as Visa and CVS, you’ve got to get pretty granular to pick a winner.

Head back to the Stock Market Madness bracket to vote for your favorite stocks and check out other previews!

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.