Why I think you should invest in Visa (V/NYSE)
At a trading price of $44, Visa shares seem to be priced on the higher side, but what you get in the bargain is a brilliant deal. Before you actually go ahead and put your money on VISA, you should, like any good trader, know what it is that makes these shares a good investment. For starters, The name VISA has so much clout. This means that it functions on an inside-out basis with customers holding it together as a cohesive unit. Today, VISA has around 1.5 billion cards in circulation with millions of dollars worth of transactions happening on a daily basis. The last fiscal saw it process transactions worth $3.5 trillion. What this brand has successfully done makes it an asset that is built on trust. With such levels of stability and acceptance from people worldwide, you hardly have a reason to expect anything to go wrong if you invest in it.
Now based on this, what VISA has for you monetarily is the opportunity to buy into an IPO of an internationally recognized name. No need to have a Visa card in your wallet and use it, but having it in your portfolio of investments would be a good idea. Another thing is that, the current market is pretty weak and at a time like this, VISA investors will get a good price for their investment.
If you have followed the pattern of large IPOs in the United States, you will see that shares do not skyrocket the minute trading begins. This allows you to get a good deal on shares before trading officially begins, as this is the pattern with regular IPOs. Talking to your broker about getting shares before the launch of the IPO would be a good idea.
It is natural to compare the growth of VISA with that of the Mastercard IPO of 2006. Naturally, the shares grew 300 percent from launch, but remember that they were under-priced to begin with. Despite the current low market scenario, VISA shares will move ahead by 50 percent in a year's time. This you can easily attribute to increasing revenue gain and the cutting down of costs. Another fact about the Mastercard IPO is that it continued to outdo its competitors like American Express and Discover Financial Services simply because of its money making processes. In comparison, VISA follows the same.
To put it simply, rival companies lend money and investors are always going to grow tired of the fact that losses can be incurred based on loan losses that reflect on balance sheets. Companies like VISA and Mastercard process transactions and take a small bit of the action. So irrespective of whether you use your card to buy a diamond or diapers for your baby, the company is going to get something.
The world over, people now prefer plastic over money, and reports show that VISA is the primary card of choice. As such, VISA is a conglomeration of several banks and associations worldwide that merged together recently. An IPO gives them greater ways to cut down costs and improve their margins. This again is an advantage over Mastercard.