Is Visa stock worth buying?

Undeniably. Visa (NYSE: V)It is a very successful investment. This is a very successful investment.

In the past decade (math.) genusIt's only top grade. financial stocks(used form a nominal expression) The total return rate is 4721 TP3T. Standard & Poor's 500Index for the same period The total return rate is 236%.

This track record has resulted in a massive corporation with a market capitalization of approximately $570 billion today. But don't be discouraged. You should still consider adding Visa to your portfolio. Here are two must-know reasons why.

Excellent financial position

Visa operates a global card payment network that connects merchants and consumers through their respective financial institutions. The company is a successful business that earns a fee for processing any transaction.

In fact, you'd be hard-pressed to find a more profitable business than Visa. VisaFY 2023 (as of September 30) (used form a nominal expression)Operating profit margin The incredibly high 64% shows how profitable it is to process card transactions using a modular approach. Other industry leaders such as Apple, resonancerespond in singing McDonald'sIn terms of profitability, the noodle is not even comparable to Visa.

Visa has also demonstrated the ability to sustain growth over the long term. Over the past five fiscal years, Visa's revenues have grown at an annualized rate of 9.61 TP3T due to increased cardholder numbers and higher payment volumes.

With minimal capital expenditures, Visa has generated strong free cash flow of $3.3 billion in the last fiscal quarter (Q1 2024, ended December 31) alone. Management decided to capitalize on this ongoing windfall by returning capital to investors in the form of dividends and share buybacks.

Why is it so important to pay attention to a company in such a strong financial position? Visa's ability to consistently grow its revenue, generate positive income and free cash flow greatly reduces the risk to shareholders. The company's near impossibility of financial problems helps it to successfully respond to any economic crisis. No pandemic, geopolitical upheaval, inflationary pressures, or higher interest rates can derail Visa. That kind of financial strength should get investors' attention.

Strong Competitiveness

Another compelling reason why Visa is currently worth buying is its economic moat. The company possesses attributes that support its favorable competitive position.

Networking It is the key to Visa's dominance and market share leadership in card payments. There are 4.3 billion Visa cards in circulation worldwide, accepted by 130 million merchants. Merchants have little choice but to accept these cards unless they want to lose sales opportunities. And for consumers, having a card in their wallet that can be used almost anywhere is extremely valuable.

Visa has benefited from the strong secular tailwind of growing digital payments. Even in developed economies like the United States, cash is still a popular form of payment.

Savvy investors will point to the remarkable rise of various fintech companies over the past decade or so. But it's worth noting that while the payments industry continues to innovate, Visa's financial performance has been stellar. I'm not worried about this company.

As we look ahead to the next five years, I have every confidence that Visa will continue to be a glorious shareholder-reporting company. Therefore, it would be wise to buy it today.

Should you invest $1,000 in Visa now?

Consider the following before buying Visa shares:

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Neil Patel and his clients do not own any of the stocks mentioned above.The Motley Fool holds recommendations on Apple, Resonance, and Visa.The Motley Fool recommends the following options:Resonance Jan 2025 $47.50 Call Option Long.The Motley Fool has a disclosure policy.

Is Visa Stock Worth Buying? This post was originally published by The Motley Fool.