Trade VISA Stock
Most people are familiar with Visa branded debit and credit cards. The company itself doesn’t issue these cards but is a payments technology company that has created a global payments network to connect consumers, businesses, and government agencies to electronic payments. While it is part of the financial services sector, the heavy technological spending at the company has made it a technology company as well in the eyes of some analysts.
Visa provides a global network that enables the cross-border transfer of value and information. The network facilitates not only the clearing and settlement of financial transactions but also the authorisation of these transactions. Over the years, Visa has also added many additional platforms, products, and value-added services while all contribute to its estimated nearly $23 billion in revenues in 2019. The company was founded by Dee Hock in 1970 and has its headquarters in San Francisco, CA.
Visa Price History
Although founded in 1970, Visa (NYSE: V) didn’t have its initial public offering until 2008. Since that time the performance of the stock has been absolutely stunning, although it did face some headwinds in the 2009-2011 period. Still, investors might have known the stock would be something special when the first day’s performance saw shares jump 28%. Since then, Visa stock has been on a seemingly endless rally that has rewarded early investors quite well.
An Epic Beginning for Visa Stock
The IPO price for Visa was $44 on March 19, 2008 ($11 per share when adjusted for a later 4:1 stock split). At the time, the Visa IPO was considered the largest in the history of the NYSE. By the end of the very next day, shares were already trading at $56.50 a share ($14.13 split-adjusted). When you consider the times, the IPO was incredible. It was the midst of the global financial crisis. Just days after the IPO JPMorgan made its offer of $2 a share for the failing investment bank Bear Stearns. Financial shares, in general, faced intense headwinds, but Visa was the clear exception.
It hasn’t been all Sunshine and Roses
What kept Visa in favour among investors is that they aren’t a bank or lender. They didn’t make loans of any sort and had no connection at all to the mortgages that caused the financial crises. Visa is nothing more than a payment network, collecting a small fee for every time a credit or debit card with the Visa logo is used. Despite that Visa still wasn’t able to side-step the negative sentiment surrounding the financial sector in 2008, and by January 20, 2009, Visa stock ended at its all-time low of $42.42 a share.
The stock spent the rest of 2019 rising, and by April 2010 had nearly reached $100 a share. However, in May 2010 shares plummeted again as the Durbin Amendment, which had a goal of making processing debit transactions less profitable, was debated in Congress. Visa stock fell to a low of $68.28 a share as investors broadly feared that profits would be regulated away. Over a year later in June 2011, the final rule was issued by the Federal Reserve, capping fees at $0.21 plus 0.05% of the transaction amount. Visa shareholders breathed a sigh of relief, and share prices rocketed, going from $75 on July 28, 2011, to more than $86 the next day.
Visa the Blue Chip Stock
Visa was added to the very exclusive Dow Jones Industrial Average on September 23, 2013, making it one of the blue-est of the blue-chip stocks. As of January 2020, it remains one of the 30 Dow stocks. And ever since 2013, Visa shares have traded higher for the majority of the time. There have been some modest dips over the years, but each time Visa recovers and the stock roars back, stronger than ever.
Strong Growth for Visa Stock
What’s really amazing is that at no time since its 2008 IPO has Visa stock been cheap. At many times it’s been trading at a higher P/E than the market average. That’s because the growth at Visa over the years has been nothing short of astounding. Even after so many years, Visa continues to deliver double digit profit growth thanks to the continued significant growth in transaction and payment volumes. Each year physical cash is losing out to cards, and each year inflation means more transaction volume as well. Neither of those trends is expected to change, which means Visa and Visa stock will continue to grow.
Trading Visa Stock
If you follow the consensus among analysts, then the obvious course is to buy Visa stock. Of the 35 analysts covering the stock, 32 rate it a buy or outperform. In addition to that, the median price target is $205, which is almost 10% above the early January 2020 price. Looking for dips and buying is a strong strategy that’s been valid for as long as Visa had been a publicly traded company.
Watch the News
Visa has several potential news sources that could send shares rocketing higher. Traders should definitely keep an eye on news of Visa’s entrance into China. Since 2014 China has said they will pass legislation that allows Visa access to the more than 1 billion people in China, ending the near monopoly that Alipay holds in the country. Any news of positive developments on that front could send Visa shares substantially higher.
Another source of upside potential from the news is the ongoing transition from physical cash to digital cash. With its strong global payments network any move to digital dollars is likely to see Visa as a partner. In any case, it has been this shift to digital cash that’s been behind much of Visa’s continued double-digit growth. As long as the trend towards digital cash continues Visa should benefit.
Look for Underperformance from Visa
Another situation to look for when thinking about trading Visa stock is when it is performing worse than the broader market. Historically whenever Visa is lagging the S&P 500, it has been a good time to buy. Such poor performance rarely lasts more than a month or two, after which shares the stock often comes roaring back.
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VISA Stock FAQ
- Why should I trade Visa shares?
As one of the largest financial services companies in the world Visa is well worth trading, no matter if you’re a scalper, a day trader, or a swing trader. Over the past 10 years the stock has been trending steadily higher, which can help with trade planning. In addition, by offering contactless payment processing Visa is well positioned to continue growing right along with ecommerce and online sales channels. The stock trades nearly 10 million shares daily, so liquidity is no problem, and it shows enough volatility to make it a suitable stock for any style trader.
- Is Visa the best financial services stock for trading?
With so many companies in the financial services sector it’s impossible to call Visa the best financial services stock to trade, although to be sure there are certainly times when it is the best. At all times it’s a good choice for traders though, especially those willing to follow its steady upward trajectory. Few stocks show such a strong trend, such massive trade volumes, and such great potential for the future. Even though the company has been in existence for over 6 decades it still remains on a strong growth path and should continue to remain attractive to traders and investors for a long time.
- What’s the best strategy for trading Visa shares?
Considering the long, strong upward trend in the stock a trend following strategy is certainly the most appropriate one to follow for Visa shares. There are several ways to do this. One is to use the relative strength index and but when conditions become oversold. So long as the trend remains in place the oversold conditions will soon correct and the trader should have a nice profit. A similar strategy uses moving averages, with buy orders being placed whenever the price comes down to touch the moving average line. Common periods used with this strategy include 20, 50, 100, and 200.