I want to draw your attention to Visa Inc (NYSE: V). I won’t waste your valuable time explaining what Visa does. As the world’s largest payments network, there’s a good chance you have one of the company’s cards in your own wallet.
The global credit card company, with a market cap of US$418.9 billion (A$586.7 billion), hasn’t had the best of years. But that may make now the perfect time to pick up some Visa shares.
As you know, consumers around the globe have been tightening their belts of late. Some of that comes from falling incomes due to lost work as companies have been forced to shut down due to COVID-19 mitigation efforts. Most of the remaining spending slump can also be pinned on the coronavirus. If you can’t leave your hometown, or even your home, you’re much less likely to splurge on discretionary items.
Recent performance
After several months of falling spending, Visa reported a roughly 10% rise in recent weeks.
An increase in online spending made up for much of those gains. That’s good news for the stock, as it gets a much larger share of online transactions than it does from in-store sales.
Now it’s impossible to predict how consumer spending will fare over the coming months. Most of that is up to the microscopic virus that’s thrown a spanner into the global economy.
What is a near certainty is that humanity will triumph over COVID-19, hopefully within the next 12–18 months. And when we do, people are likely to go on historic spending sprees, splurging on travel, dining, and all the other goodies social distancing and lockdowns have denied them.
With the growing popularity of stocks like Afterpay Ltd (ASX: APT), not everyone will use Visa, which also offers debit cards. But many will.
After a lacklustre year, with the Visa share price up a mere 2.9% since 2 January, Visa is one global share you should consider adding to your own holdings, in my opinion.
A note on international shares
There are many good reasons to add international shares to your portfolio. Aside from diversification, the simple fact is many of the world’s best companies are listed outside of the ASX.
But not everyone is comfortable buying international stocks. While it’s become much simpler and cheaper in recent years, there are a few other aspects you need to consider. Currency fluctuations are chief among them.
If the US dollar falls against the Aussie, as it’s been doing in recent weeks, it would see your Aussie dollar returns increase once you sell your shares. But if the greenback rises, it will diminish your gains or increase your losses.
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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Visa. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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