The Stock That’s Everywhere You Want to Be

Hey There Income Hunters,


Did you guess what stock I’m talking about in the title?


It’s definitely my favorite credit card and to its, um, credit … it has never been turned down, in my experience.


Of course, I’m talking about Visa (Ticker: V), which is accepted in 200 countries and is the No. 1 payment technology company in America with a market cap of about $494 billion … 


And how about 183% gain on average for the past 12 years …



And, based on my analysis, there is more growth to come!


You see, a handful of networks have come to dominate electronic payments, and at this point, Visa has reached universal acceptance in most developed markets… 


For the dominant payment networks with global footprints, such as Visa, the network effect and resulting cost advantage is strong enough to lead to a wide moat …


Visa earned a wide moat by also returning over 20% on invested capital for the past 3 years… 


Plus, Visa’s revenues have increased at a compounded annual growth rate (CAGR) of 9.7% during the past five years …



The company's growth was interrupted by the Covid-19, as net revenues amounted to $21.8 billion, a decrease of 5% from the previous year, while its bottom-line declined 10% to $10.9 billion.


However, Visa will return to its growth path this year, with revenues above $23 billion and net income close to $12 billion.


By 2023, revenues are expected to reach $31 billion, or 48% above FY 2021, which is an impressive growth.


And just check out their Net Margin percentage and ROA the past three year in the chart above.


Here’s My Trade


I purchased a Sep 17 205/215 call spread for $4.15 … 



The trade only has a delta of nine shares, meaning if Visa drops $2, the mark-to-market loss is the delta, or a percentage of shares multiplied by the profit and loss (P&L).


So, the low delta limits the mark-to-market P&L until expiry … 


That is what I like about the vertical option spread: The delta is 100% of my shares at any price above $205, up to and including $215.


At $215 and above I’ll capture a maximum profit of $585.


Bring It Home


The global financial payment industry — and especially Visa, with its cost and network advantages — is a big winner in a zero-rate environment … 


The Fed’s aggressive money printing (QE), along with a reopening economy, is super bullish for Visa … 


Plus, they are everywhere you need to be …


Until next time …


Live and Trade With Passion,



Griff

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