{"id":24005,"date":"2011-09-22T05:00:22","date_gmt":"2011-09-22T09:00:22","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/09\/22\/visa-new-all-time-highs-in-sight-amidst-the-volatility\/"},"modified":"2011-09-22T05:00:22","modified_gmt":"2011-09-22T09:00:22","slug":"visa-new-all-time-highs-in-sight-amidst-the-volatility","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/09\/22\/visa-new-all-time-highs-in-sight-amidst-the-volatility\/","title":{"rendered":"Visa: New All-Time Highs In Sight Amidst the Volatility"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

\"\"<\/a>It\u2019s been a rough year for equity investors as fear of European sovereign-debt meltdown have ravaged world markets.\u00a0 The S&P 500 is down 11% from its late-April highs and is in negative territory for the year.\u00a0 Financials and other economically-sensitive sectors have taken much greater losses, and European markets have experienced what could only be called a bloodbath.<\/p>\n

Yet in spite of the volatility roiling the markets, Visa (NYSE: V)<\/strong> has pushed through to fresh 52-week highs and is within striking distance of new all-time highs above $97.00.<\/p>\n

\"\"<\/a><\/p>\n

\"\"<\/a><\/p>\n

Not even Damocles had Dodd-Frank hanging over his head.<\/p>\n<\/div>\n

Visa\u2019s resiliency is somewhat ironic.\u00a0 So much of the recent market turmoil was due to political uncertainty, first in the United States with the debt ceiling fiasco and then in Europe when it appeared that Germany might not step up and come to Greece\u2019s rescue.\u00a0 In Visa\u2019s case, the political uncertainty that had been keeping a lid on credit-card stocks\u2014the implementation of the Dodd-Frank Durbin Amendment\u2014was finally resolved this summer.<\/p>\n

With fears of the Fed\u2019s fee cap no longer hanging over their heads like the Sword of Damocles<\/strong>, shares of both Visa and rival MasterCard have performed as you might expect.\u00a0 While Visa is approaching a new all-time high, MasterCard surpassed its old high earlier this year and is up more than 50% year to date.<\/p>\n

I remain bullish on credit-card stocks in general and Visa in particular.\u00a0 If\u2014as many fear\u2014the United States slips again into recession, consumer spending will take a hit.\u00a0 But there are a couple important points to remember:<\/p>\n

    \n
  1. Recession or not, the world is going cashless<\/strong>.\u00a0 Every year a larger percentage of transactions is done electronically, yet even in the United States fully 40% of all transactions are still done with cash or paper checks.\u00a0 So, even in an environment of stagnant retail sales growth, card usage should continue to grow, be it in the form of debit cards, credit cards, or even pre-paid cards.<\/li>\n
  2. Visa is not a \u201ccredit card stock,\u201d<\/strong> per se.\u00a0 It\u2019s a brand-management company that controls a sophisticated\u2014and highly profitable\u2014electronic toll road.\u00a0 Visa is not<\/em> a bank and takes no credit risk; that is the job of the banks that issue cards branded with the Visa logo.\u00a0 Visa makes its money by charging banks service fees for the use of its Visa brand and its global electronic-processing network for credit and debit cards.<\/li>\n
  3. Visa is what I consider an \u201cEmerging Markets Lite\u201d investment.<\/strong>\u00a0 The company already gets 40% of its revenues from overseas, most of which are from the fast-growth markets of Asia and Latin America. Visa has a stated objective of having more than half of its revenue from overseas by 2015, and all indications are that the company will reach this goal.\u00a0 The rise of the new emerging market middle class is real, and Visa is uniquely positioned to profit from this trend.<\/li>\n<\/ol>\n

    Given the outsized profits to be earned from the \u201cPlastic Revolution,\u201d<\/strong> it\u2019s not surprising to see new competition nipping at Visa and MasterCard\u2019s heels.\u00a0 EBay\u2019s (Nasdaq: EBAY)<\/strong> PayPal recently made a splash by expanding beyond its core internet payments business into physical \u201cbricks and mortar\u201d retail.<\/p>\n

    PayPal account holders will soon be able to pay using their mobile phone and a pin number, and they can already use PayPal-issued cards that work in traditional point-of-sale terminals.<\/p>\n

    It remains to be seen what kind of market share PayPal will be able to grab, but I remain somewhat skeptical.\u00a0 PayPal does not replace<\/em> your traditional bank account or credit card; it simply acts as a middle man between your financial institution and the merchant.\u00a0 And while PayPal is indeed popular, it lacks many of the account security features of traditional card issuers.<\/p>\n

    Furthermore, many of the innovations attracting the most attention\u2014such as paying with your mobile phone\u2014can be copied by banks.<\/p>\n

    In any event, the market for electronic payments is large enough and has enough growth potential to accommodate newbies like PayPal.\u00a0 And in the meantime, Visa should continue to hum along nicely.\u00a0 Use any corrections as an opportunity to accumulate more shares.<\/p>\n

    Related posts: Sizemore Insights’ commentary on Visa<\/a><\/p>\n

    If you liked this article by Sizemore Insights<\/em>, you\u2019d probably enjoy The Sizemore Investment Letter<\/em>, our premium members-only newsletter. Click here<\/a> for more information.<\/p>\n","protected":false},"excerpt":{"rendered":"

    By The Sizemore Letter It\u2019s been a rough year for equity investors as fear of European sovereign-debt meltdown have ravaged world markets.\u00a0 The S&P 500 is down 11% from its late-April highs and is in negative territory for the year.\u00a0 Financials and other economically-sensitive sectors have taken much greater losses, and European markets have experienced … <\/p>\n

    Continue reading “Visa: New All-Time Highs In Sight Amidst the Volatility”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-24005","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=24005"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24005\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=24005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=24005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=24005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}