During pre-pandemic period, Visa (V) and Mastercard (MA) were attractive megacap stocks to invest in. It only makes sense as both companies were profit-making machines. However, now that the pandemic is still rampant, a large portion of their revenue has taken a hit due to restrictions on cross-border travelling and physical leisure activities. However, this doesn’t remove the fact that Visa and Mastercard are solid stocks to invest in as the world is trying to recover from this pandemic at an urgent rate. Also, there are signs of inflation in the works and this will be a tailwind for Visa as the increase in price of goods and services benefits the commission that Visa gets from each transaction made.
Is it a good time to enter Visa now?
In this post, I’ll focus on Visa as it historically outperforms Mastercard and almost any market catalyst would affect both in a similar manner. First, we shall study Visa’s daily chart (as of 1st Sep 2021):
Item A: Visa got rejected at the USD251 resistance and continued its downward trend with heavy selling as shown by the overpowering number of long red candles, breaking previous support levels. Not a good time to be invested in Visa even if you’re buying the dip.
Item B: Strong bearish signals with the candles being easily rejected from the EMA 20 (yellow) trend accompanied with 3 red candles each time. This alone shows that investors are skeptical of Visa’s current valuation — the daily candles weren’t even attempting to test the EMA 50 (blue) trend.
Item C: Solid downward candles attempting to break below the USD230 support with low buying volume is a strong signal that the chart will most likely see further selling strength. Considering there is no bullish news in the near future.
The game plan
Visa is built on strong fundamentals and has proven to be a cash cow during the pre-pandemic period. They have strong partnerships with huge online brands like Google, Facebook, etc. and the pandemic has only accelerated the adoption of cashless payments, globally. While the current sell-off in Visa’s chart may not be encouraging there still are tailwinds (cross-border travel, inflation, physical leisure activities) to look forward to. At this moment, I’m just waiting on the side while being on the lookout for the selling to settle down and for more bullish news to settle in. History has shown how rapidly Visa’s stock value can appreciate. Currently, with the world eagerly wanting to recover from this pandemic you can be assured that the Visa bulls will charge right back in.
Until then, I’ll post updates when Visa’s chart begins to show signs of a recovery.