As we stand on the precipice of a new year, the economic outlook remains uncertain. Inflation is high, interest rates are at their loftiest levels in years and it is widely expected that many nations will slide into recession in the coming months.
That being the case, picking stocks with a view to generating a near term return is becoming increasingly difficult. Investors choosing to enter the market in the current climate will need to be both patient and prepared to weather potential volatility over the months ahead.
Despite the challenging economic environment, there are still stocks which are potentially poised to have a strong 2023. Visa is one such stock. Let’s see why.
|Symbol for Invest.MT5 Account:||V|
|Date of Idea:||19 Dec 2022|
|Time Line:||12 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Therefore, you should never invest more than you can afford. Start small to understand your own risk tolerance levels or practise on a demo account first to build up your knowledge before investing in the live markets.
Why Trade Visa?
With all the exciting companies listed on the global stock market, investing in a well-established, blue chip company like Visa may seem like a bit of a boring choice.
But, when it comes to investing, sometimes boring is good! With the uncertainty that currently envelops the stock market, a consistent company like Visa, which is entrenched in its market and generates a shedload of reliable income, is exactly what investors should be looking for.
A Global Giant
The company itself needs little introduction, and, with almost 4 billion cards in circulation, it’s probably safe to say a fair percentage of readers own a debit or credit card emblazoned with the company’s name.
The core business model is simple. Each time a payment is made with one of these 4 billion cards, it travels along Visa’s payment network, a privilege for which Visa charges a percentage of the total payment.
Operating in more than 200 countries and territories around the world, Visa processed roughly 40% of global card payments in 2021. In the full year ending 30 September 2022, the payment processing company reported net revenue of $29 billion and net income of $15 billion, increases of 23% and 21% respectively year on year. Not many companies can boast that kind of profit margin.
Resilient Stock Market Performance
Despite an excellent financial performance, as the market closed on 16 December, Visa had fallen 4.5% year to date. Whilst that isn’t exactly fantastic, it should be taken in the context of the wider market. Over the same time period, the Dow Jones and S&P 500, both of which contain Visa as a constituent, slumped by a far more profound 9.4% and 19.2% respectively.
So, although the Visa share price has fallen in 2022, it has significantly outperformed the wider market.
Visa’s method of generating revenue is best suited to an expanding economy. Put simply, the more people spend, the more Visa earns. Nevertheless, it’s a stock which has the potential to perform robustly in all stages of the economic cycle, as evidenced this year.
Regardless of the economic outlook, people have to buy things and, as cash use declines in many countries, an increasing amount of these purchases are being made using credit or debit cards. What this means is that Visa should be able to depend on a reliable stream of revenue, regardless of what the year ahead holds for the global economy.
However, make no mistake, a recession, and a consequential fall in consumption, would be bad news for Visa. But the stock’s defensive qualities – as well as its large amount of cash and low debt ratio – should enable it to weather a potential economic storm and thrive on the other side.
Visa Stock Forecast – What do the Analysts Say?
According to analysts polled by TipRanks for a Visa stock forecast in the past 3 months, there are currently 17 buy,1 hold and 1 sell ratings on the stock. The highest price level for a Visa stock forecast is $287.00 with the lowest price target at $216.00.
The average price target for a Visa stock forecast is $250.44.
An Example Trading Idea for the Visa Stock Price
An example trading idea for the Visa share price could be as follows:
- Buy the stock on a break above $215.00 to allow for current market volatility.
- Target the average analyst price target at $250.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 12 months
- If you buy 10 Visa shares:
- If target is reached = $350.00 potential profit ($250.00 – $215.00 *10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, if it rises at all. This is especially true in the present due to the significant headwinds the economy currently faces.
It is crucial to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Visa stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall.
How to Buy Visa Shares in 4 Steps
With Admirals, you can buy shares in Visa and over 4,500 other listed companies! In order to buy Visa shares, follow these steps:
- Open an Invest.MT5 account to access the Trader’s Room
- Click Invest next to your account in order to open the MetaTrader WebTrader
- Search for Visa shares at the bottom of the Market Watch window and drag the symbol onto the chart
- Click New Order at the top of the screen and enter the number of Visa shares you want to buy
Click on the banner below to trade Visa stock today. ▼▼▼
Do You See the Visa Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Visa’s share price will move lower, then you could choose to go short using CFDs (Contracts for Difference).
This means you can trade long and short to potentially profit from both rising and falling stock prices. Learn more about CFDs in this ‘How to Trade CFDs‘ article.
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
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- The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter “Author”) based on personal estimations.
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