Visa Inc (NYSE:V) has been a big winner this year. Visa stock is up 35% so far in 2017, versus a 13% gain for the S&P 500. But that shouldn’t come as any surprise to investors.

For starters, Visa stock always seems to be a big winner. With exception to last year, Visa stock has consistently and strongly outperformed the S&P 500 on an annual basis for the past several years. This year is just more of the same.

Then there is this whole global alternate payments shift which is more-or-less centered around Visa. Cash is becoming a thing of the past. As alternate payments take center stage, Visa is presented with a plethora of long-running growth opportunities. Think not only cards, but the whole suite of products that come with payment electronification. That includes e-commerce, mobile commerce, and transactional Internet-of-Things (IoT) devices, to name a few.

So all in all, Visa’s big run this year shouldn’t come as a surprise to investors. It is a secular winner entering an era of robust growth potential.

The question then becomes: is there more room to run for V stock?

I think so.

Visa’s Strong Growth Narrative

The growth story at Visa is very, very strong. The shift from cash to alternate payment methods serves as a huge tailwind for Visa.

Let’s look at three specific, multi-year growth opportunities for Visa.

First, there is Visa Token Service. Token Service is a platform aimed at unifying mobile and digital payments. It is very well used. Huge mobile transaction platforms like Apple Pay and Android Pay are built on a Token Service foundation. As digital, and especially mobile, commerce continues to scale, Token Service will be a natural winner.

Second, there is Visa Direct. This is the fast or push payments side of Visa’s business. Visa Direct essentially allows people and businesses to send money quickly, conveniently and securely. This easy-to-use payment service offers a high value proposition in today’s digitally connected world for two reasons: social payments and the gig economy. On the social payments side, people like to send money to one another through their phones. On the gig economy side, a service like Visa Direct makes contractor payments that much easier and more seamless.

Third, there is Visa Checkout. The whole purpose of Visa Checkout is to remove frictions in online shopping and improve sales conversion rates. Sam Shrauger, Senior Vice President of Digital Products at Visa, said in a recent presentation that online sales conversion rates improve dramatically with Visa Checkout (from about 65% without to 80%-plus with). Because of this, as digital commerce continues to scale, Visa Checkout will be a big winner.

Behind these three growth initiatives, Visa should be able to drive robust sales and earnings growth into the foreseeable future.

The Numbers Say V Stock Is Still Undervalued

Investing always comes down to the numbers, so let’s take a look under the hood.

Due to all the aforementioned secular tailwinds, analysts are projecting earnings growth of roughly 17% per year over the next 5 years. That seems a tad high. Revenues should grow around 10% per year due to a boom in m-commerce and the number of transactional connected devices. Healthy revenue growth should allow for equally healthy operating expense leverage, but not enough to turn 10% revenue growth into high-teens earnings growth.

I think the 5-year forward earnings growth rate is more like 15%. V stock is trading around 26-times forward earnings, so that is a price-to-earnings/growth (PEG) ratio of about 1.7.

The S&P 500 is trading around 18-times forward earnings for roughly 10.5% annualized earnings growth potential. That means the market has basically the same PEG ratio as V, implying the two offer equal bang for your buck.

That isn’t a great set-up. After all, as an investor, I’m looking to generate alpha, not returns in-line with the market.

But Visa stock is a safe place to park your money. Just look at the longer-term chart for this stock. It doesn’t matter what time frame you pick (6 month, 1 year, 3 years, 5 years, or 10 years), the line of best fit is a straight line with a healthy upward slope.

Investors pay a premium for this stability. That is why V stock’s average price-to-earnings multiple over the past 5 years is just shy of 33-times.

It is a pretty safe assumption to say V stock will trade at the average 33-times multiple over the next few years. I think earnings per share in fiscal 2019 look something like $4.50 (the Street is sitting at $4.64). A 33-times multiple on earnings of $4.50 per share implies a price target of $148.50 by the end of fiscal 2019. Discount that back by 15% per year, and you get a fair value estimate of roughly $112.

V stock currently trades around $105.

Bottom Line on Visa Stock

Visa is a secular growth story with a stock that has run up to a premium valuation.

But this is the sort of stock investors pay a premium for. With multiple operational tailwinds in place for the next several years, it certainly looks like Visa stock can and will head higher.

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