Why Visa Remains One of the Best Values in the Financial Sector Now
Visa Inc (NYSE:V) is coming up on its fifth anniversary in the Trend Portfolio.
V is moving quickly into the fintech world where it is now competing with companies like other Trend Portfolio favorites Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG) in the payments and increasingly fintech space.
The thing is, Visa is coming at it from the opposite end of the spectrum. While companies like Apple are looking to find ways to deliver more value to their products and platforms by offering payment solutions (and they get a cut of the revenue of course), Visa already has that payments model down and it’s now extending its business into digital payments, rolling over of swallowing up competitors and complimentary services along the way.
And the new fintech market space has accelerated Visa’s growth in the global payments space beyond expectations.
Its $5.3 billion deal for Plaid two years ago has made it a major player in the digital payment services sector.
Plaid is an 8-year-old payments fintech that allows consumers to link their bank accounts to financial services firms to transfer money. Its biggest client is PayPal’s (NASDAQ:PYPL) Venmo peer-to-peer (P2P) payment service as well as all the other fintechs and neobanks below.
This is a huge market as younger, digital native generations are now earning money and spending it in a world full of e-commerce and app-based technologies. If you can’t do it from your smartphone, it’s unlikely going to inspire much interest.
Remember both Millennials and Gen Z are each bigger populations in the US than the baby boomers. And both these cohorts are digital natives and growing up.
For big banks as well as community banks and credit unions these customers are the future of their organizations. Digital banking isn’t a fad and banks that are simply hoping it all passes are going to get left behind with little chance to enter the game late and hope to capture market share.
The big banks have the resources to build out their own solutions to some of these challenges, but Visa has built such a powerful brand globally, that every bank wants to have V associated with its organization in some capacity.
And the same goes for vendors. If you don’t accept a major payment platform like Visa for your shop or business, then you risk losing customers to competitors that do.
And now, V is not only managing the traditional credit and debit spaces, but it’s expanding its services in to many aspects of the digital banking model, including new areas like buy now pay later (BNPL) and cryptocurrencies.
As the company shows in the graph below, it’s now powering more than 6 million transactions an hour around the world.
And this is just the beginning.
As many MegaTrends readers know, I’m as much about a company’s future as its present. And V fits a number of powerful trends on both the consumer side as well as the revolution in the financial sector.
What’s more, its lineage as the first actual credit card issuer in 1958, shows that it has disruptive qualities built into its DNA.
Talking the Talk and Walking the Walk
It’s also reflected in Visa’s stock performance.
While the stock has lost 8% year to date, the S&P 500 is down more than 20%. That may be cold comfort for some investors, but the fact is, it’s holding its value in a market that is extremely volatile, just like a good MegaTrend stock should
The graph above shows what that outperformance looks like over time and why we’re bullish on V moving forward.
Once all the economic pieces fall into place, V will be one of the first stocks to take off. And right now, it’s on sale. It’s not a big discount, but don’t expect V to get super cheap. It has too much going for it.
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