Few companies typify the long-term mindset that accompanies consistent stock market winners better than Visa (NYSE:V). Its focus, addressable market and day-in-day-out ability to execute make V stock one of my favorite blue-chip stock picks.
Today, it’s a $400 billion behemoth — and even in light of the novel coronavirus pandemic this year, the company is holding its own, and the stock is reaping the rewards.
Here’s a look at some of what makes V stock such an attractive pick moving forward:
Visa Is Robust and Betting on Itself
It’s almost always good when you see established, blue-chip companies like Visa betting heavily on themselves. That has been the story of 2020 thus far for the credit card giant, beginning the year with the acquisition of the hot fintech startup Plaid for $4.9 billion in cash.
Visa may have been born in the ’50s, but you don’t earn a value of $400 billion by 2020 if you’re not willing to adapt with the times, and the acquisition of Plaid, which helps other fintech firms connect with their customers’ bank accounts, is a perfect example of Visa’s savvy.
Firstly, the move will further entrench Visa in digital payments; it’s already the largest credit card network in the U.S., handling $2.1 trillion in transactions last quarter alone. To stay as relevant as it is today, Visa needs to embrace the fintech space and the world of e-commerce. It continued doing just that in the Plaid acquisition.
Second, buying Plaid with cash — instead of, say, a deal financed entirely with V stock — shows just how much executives believe in the company longer term. The company was saying: “No, we don’t believe our stock is overvalued, and we’re willing to put our money where our mouth is.”
That sentiment was followed up last quarter as the company bought back $3.2 billion in V stock. Not only that, it reiterated its intentions to buy back $9 billion in Visa shares on the year — one of the most uncertain years in our lifetimes.
Good Earnings, Better Trends for V Stock
It’s no wonder Visa is beating the market this year. It even managed to boost both revenue and earnings in the difficult March quarter, seeing revenue jump 7% year-over-year and non-GAAP earnings per share increase 9%.
Going forward, an increasingly cashless economy will continue to be a long-term tailwind for Visa, and rollouts of contactless card technology will make the company increasingly relevant for in-store purchases as well.
Visa’s stock is also well-positioned for the unstoppable shift to e-commerce that has been ongoing for years now, and which has been accelerated by the pandemic. Nobody’s using cash when shopping on Amazon (NASDAQ:AMZN), and that’s good for payment processors like Visa, which saw e-commerce volumes rise 18% in April.
Visa is one of the rare names that investors can buy and hold for 10 years without sweating whether the company will exist or still be a player. V stock, which has outperformed the market in a very tough year for investors, looks poised to do so for years to come.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.