2 Reasons Why Visa Is A Screaming Bargain Right Now

Core Viewpoint - The recent decline in Visa's stock presents a buying opportunity for investors, as the drop was driven by market fears rather than the company's fundamentals [3]. Business Model - Visa operates as a payment network rather than a lender, processing 329 billion transactions across 220 countries in the year ending September 30 [4]. - The company collects a fee on each transaction, making it resilient against regulatory changes regarding credit card interest rates [5]. Stock Performance - Visa's stock has underperformed the S&P 500 over the past year, with a gain of just over 7% compared to the market's 20% [5]. - The company's dividend yield remains around 0.5%, with a recent dividend hike of 13.6% [6]. Consumer Spending Trends - Despite economic concerns, American consumer spending remains strong, with retail sales increasing by 0.6% in November [8]. - The University of Michigan's consumer sentiment indicator rose for the second consecutive month in January, indicating potential for increased transactions for Visa [8]. Growth Opportunities - Visa is positioning itself to benefit from the growth of stablecoins, which are pegged to the US dollar and facilitate international transactions [9]. - The company launched stablecoin settlement in the US, achieving a monthly settlement volume of $3.5 billion annualized as of November 30 [10]. Financial Health - Visa's management has engaged in significant share buybacks, repurchasing 9% of the company's float over the last five years, which supports earnings per share and dividend growth [12]. - The company maintains a strong balance sheet with $23.2 billion in cash and investments, nearly offsetting its $25.9 billion debt, providing a cushion for continued dividend payments [13].