Tuesday, August 22

Visa: Launching off the Travel Boom

We've been feeling great about our Visa ($V) position for the past year, but now we need to revise things as there's a moment of relative leverage we want to take advantage of. 

Basically, as brands like United Airlines and Delta ride high across a booming travel scene, one trend is becoming clear: Americans are not traveling within the U.S.

A massive portion of this travel boom is Americans traveling abroad to places like Europe. 

With a similar strategy to United and Delta, Visa is set to net a lot of gains from this flow of spending across the next year. However, Visa's stock price has not grown enough to match this outsized boom in spending. 

The reason? The market is assuming the dollar that will stay stronger for longer -- which may not necessarily be the case.

With inflation more and more under control, a few months of paused interest rates are far more likely. If those pauses coincide with heightened international travel across the next few months, then Visa stands to benefit as their international revenues would be impacted less by foreign exchange pressure. 

For big institutions like Visa, it's important to keep the fundamentals and the overall macro environment in mind. With a weaker dollar on the horizon, now appears to be a solid moment to bet bigger on the future of the world's premier card provider. 

Let's try to keep this update brief so we don't hit you with too many boring macroeconomic details. So, let's get into our price target and our rationale. 👇

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