Will Visa Inc (NYSE: V) Keep Rallying Higher This Year?
Visa Inc (NYSE: V) had a stellar 2017 given that its stock gained 46% last year, which was much higher that the S&P 500 average return. The company’s stellar performance was boosted by the prevailing macroeconomic trends as credit and debit card transactions surpassed cash transactions for the first time last year, according to Euromonitor.
Visa had a stellar 2017 where the stock gained about 46%.
The company made accretive deals with Costco and PayPal.
There are many factors favoring the company’s success this year.
The fact that last year was the first full calendar year of Visa’s new partnership with Costco Wholesale Corporation (NASDAQ: COST) as the exclusive credit card brand accepted by the retailer also contributed to the company’s excellent performance. The company is also the co-branding partner for Costco’s proprietary credit card, which based on the high caliber of customers shopping at Costco, is likely to be a very lucrative deal for Visa.
The payments company started 2018 on the right footing as it announced that merchants would not require to collect signatures when processing chip card payments. The new provisions will take effect in April, which a move that was long overdue given that Visa’s competitors including the American Express Company (NYSE: AXP) and Discover Financial Services (NYSE: DFS) has already discarded signatures.
Most merchants including brick and mortar retailers such as Wal-Mart Stores Inc (NYSE: WMT) welcomed the move since processing signatures usually results in almost double the fees charged for processing payments authorized through PINs. However, the new provision is limited to chip cards, which are considered more secure as opposed to older cards that store the authorization code on magnetic strips, which can be easily hacked.
Last year, the company’s revenues grew by 22% on an annualized basis, which was higher than Mastercard Inc’s (NYSE: MA) 18% revenue growth rate, and American Express’s 9% revenue growth. The company went further to ink a deal with Paypal Holdings Inc (NASDAQ: PYPL), which is likely to stop the digital payments company from blocking Visa’s cards on its platform.
Many of the factors that led to Visa’s excellent performance are still at play and could contribute to the company’s performance this year.
However, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.
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