Visa is an interesting investment for traders looking into putting their money in a profitable company that has shown a strong increase in the price per share in the last few years. Visa is the largest payment processor around the world and its stock has grown by 20% in the last decade, with predictions of an equal increase in the coming 10 years.
The industry seems to be stoppable, and the events that transformed the world in the last year have had a positive impact on this kind of company with a strong increase in e-commerce and less dependence on hard cash.
Visa has been able to maintain its leadership in the industry competing against other big card companies like MasterCard. If you are looking into investing in a company with great prospects and a strong presence, having the security that the company is going to evolve with the times and adapt to newer challenges, then buying Visa stock is the right move for you.
Do you have a broker already? If not, we present here a guide that will walk you through the process of finding a broker and buying Visa stock step by step. Additionally, we include a bit of information to keep in mind when starting to invest in this (or any) company, as well as some information on the business that Visa is dealing with and the prospects the company has, in the hopes of helping traders to decide if this is the right investment for them.
Advantages of owning Visa stock
Certain aspects make investing in Visa stock an attractive option, even if traders may have missed the right time to buy shares, there is still time to make the right move.
One of the main aspects that investors look at is the margins the company is making. And in the case of Visa, they are incredibly high. This shows how efficient a company is run and offers positive optimism to investors.
The higher the margin, the more that company is making in sales in terms of profit. While normally 15% is considered already a good margin, Visa is making a 65% margin in some of their areas, which is one of the highest margins ever considering different industries as well.
As a measurement, MasterCard, which is the second-largest company in the payment processing industry, makes a margin of around 53%, which is considerably lower. Companies like American Express or PayPal are more in the 14 or 16% margin, making Visa a much more interesting investment.
There is also a clear feeling that Visa is a better company compared to others in the industry, and this has kept them in the first place for a while now. But, what does it all mean?
Basically, Visa has been able to keep a business model based on low cost, which allows them to maximize profits. The fact that they have been able to keep this up for a decade, shows how stable and strong their model is, making them an attractive investment for those looking to keep risk manageable. It means, also, that the company can deal with stagnant periods, adapting to the times and still being able to offer high-quality services at a reduced cost.
What is more, Visa is generating a strong influx of cash flow, which is used to pay off debt and reinvest in newer technologies and return to the investors in the form of dividends. Another great reason to invest in Visa stock.
Finally, experts believe that Visa shares are still to experience a growth in their value in the coming years, as the company holds their position and keeps their growth steady.
Recent challenges for Visa
There is no doubt that the Covid pandemic has had an effect in all industries around the world, and is no different for Visa. While the world economy is starting to reactivate, especially in places like the US where vaccination rates are reaching the target, in other countries, like India, things are still not looking very positive.
International travel is still restricted and won’t fully recover until later this year or maybe 2022. If economies around the world don’t start experiencing a strong recovery, Visa will likely suffer from a downturn movement in customer demand. After all, a big part of the Visa operations concentrates on travel, fuel, entertainment, and restaurants, all sectors strongly affected by the pandemic.
But, Visa is also trying to turn this event into an opportunity, capitalizing on new sectors that have experienced a boost due to the pandemic. A good example is contactless payment, a method that has experienced rapid growth as people prefer to avoid touching screens and passing on cards due to hygiene reasons. Smart, no?
We expect more of these examples to come up in the coming months, with high hopes that Visa will turn around a hard time into new chances, which investors cannot ignore.
How to buy VISA stock?
If you already have a broker, you need to make sure it offers you access to the New York Stock Market (NYSE), where Visa stock can be found under the ticker V.
If you don’t have a broker, apart from making sure it offers you access to the mentioned market, there are other aspects to consider that will help you become a successful trader. That is because your broker doesn’t only offer you access to the stocks, but provides you with a myriad of tools and instruments that can be used to make wiser deals and achieve your investing goals.
But, before getting down to choosing a broker, traders should think about their own trading style, strategies, and what they are hoping to achieve. Making sure your investment capital is defined is also a must, since it will help you decide how many shares you can buy, as well as keeping in mind that no more than 10% of your total capital should go to one single company. Experts recommend diversifying your portfolio in order to help manage risk, since investing in one single company may prove dangerous if that company doesn’t perform as expected.
So, how to find the perfect broker for you?
Among the many aspects to consider when choosing a broker, some may have more weight than others. Some of the basics include safety, commissions and fees, features on the online platform, research and educational tools, and customer service.
While there may still be other aspects that help you narrow down the options, these are the aspects that may have a stronger impact on how perfect a broker is for you.
Once you have chosen the broker that suits you and your trading style better, then it’s time to open an account. Your broker will ask you for some personal information in a very simple process, to then verify the account.
When this is done, then you are expected to deposit the money you want to use for your investments and get started buying Visa shares.
Company overview
Visa is the largest payments technology company with operations all around the world. They provide digital payments for all kinds of businesses, financial institutions, and private users. Visa also offers card payment options and also particular services.
Visa has four main brands through which they offer their services: Visa, Visa Electron, VPAY, and PLUS. The way the company works is not providing cards with their brand, but offering them to financial institutions, like banks, so they can offer credit and debit cards that are managed by Visa.
To process the billions of operations that Visa has daily, the company has highly secured buildings around the world. This is what allows Visa to run all the operations in real-time without delay, something users are now very accustomed to.
The company was founded in 1958 and it’s based in San Francisco, California.
Final thoughts on buying VISA stock
The digital payment industry is growing consistently, and Visa is leading the move. The effects of the pandemic are still being felt by the company, but that may only be the chance for a stronger coming boost in the price of shares. Visa is performing well under the circumstances, which positions it in a favorable place in the eyes of investors looking for a more long-term strategy and a safe bet.
There is no doubt that in this area competition is fierce, and Visa will have to step up the game to stay on top. However, their margins are still much higher than other companies in the same sector.
Investing in Visa stock may depend on the traders’ strategies and principles, as well as on how it fits in their portfolio. Day-traders may not benefit from this investment, but, as we said, buying Visa shares may not be for all.
