This 'Global Elite' Payments Giant Presents a Growing Buying Opportunity

Longtime Stansberry Research readers know that we're always on the lookout for buying opportunities among the "Global Elite"...

These are some of the best companies in the world. And they dominate their industries – they have fortress-like balance sheets and powerful, well-known businesses.

Because of their position, there's usually tons of demand for these businesses. As a result, their shares command premiums in the market, making them more expensive than most stocks.

But there may still be room for these stocks to grow... including the one we're covering this week.

In order to ensure our success as investors, we need to recognize when these great companies offer buying opportunities. When these businesses decline by 20%, they pique our interest. When they drop by 25% or more, they really grab our attention.

When volatility hits the share price of a Global Elite company, don't hide from it. That might present a valuable buying opportunity... like the one we're seeing with a top-performing payments company right now...

Visa (NYSE: V) is a credit-card and payments-network giant. Its electronic-payments network is the largest in the world in terms of payment volume and the number of merchants that accept its cards.

At the end of the company's recent third quarter, it had more than 3.7 billion cards in circulation. That included 1.2 billion credit cards and 2.5 billion debit cards. All in all, Visa's cards in circulation grew about 7% from the same period in 2020.

Visa doesn't have a complicated business model. The company makes most of its money from "card association fees." Essentially, Visa collects a small portion of each transaction – about 0.2% – every time someone pays with a Visa card.

This may not sound like a lot, but these fees add up quickly. And that's especially true given Visa's expansive network. Think about how many times per week you swipe your credit card. Then multiply that number by the millions (or billions) of cards used every day.

Thinking about it like that, it's easy to see how Visa brought in $24.1 billion in revenue in the 2021 fiscal year, which ended on September 30.

Its business model is also extremely capital efficient. That means it doesn't cost Visa much to issue new cards and add new merchants and consumers to its network. So, the company produces loads of free cash flow ("FCF"). And it uses this FCF to reward shareholders...

In the 2021 fiscal year, Visa returned more than $15 billion to shareholders through dividends and buybacks. The company will only continue to reward shareholders going forward.

Visa's success relies heavily on consumer spending. When people are out buying things and swiping their Visa cards, the company brings in more in fees. And its extensive network means that Visa is a good bellwether for consumer spending and, therefore, the broader economy.

You see, consumer spending makes up more than two-thirds of the U.S. gross domestic product ("GDP"). So, the economy is extremely reliant on consumers and their purchasing habits.

And right now, consumer spending is thriving. That's great news for Visa...

In a U.S. Securities and Exchange Commission ("SEC") filing last week, the credit-card giant released consumer-spending data for the month of November. This information revealed that payments volume on Visa's network was up 25% from the same month last year.

But remember, COVID-19 heavily influenced spending in 2020, even late in the year. So, comparing 2021 with 2019 instead can give us a better picture of consumer spending. And it looks strong...

In November, U.S. payments volume on Visa's network was up 33% from the same month in 2019. That's especially impressive given the flat spending numbers in October and last month's low consumer sentiment due to concerns over inflation and the Omicron variant.

Globally, Visa processed 226% more transactions in November 2021 than in November 2019. And, as a sign of the economic rebound, Visa said that monthly travel spending has surpassed 2019 levels for the first time since the pandemic began.

Visa also provided additional insight on how consumers are spending their money...

According to the company's data, consumers continue to favor online shopping and digital payments. "Card not present" transactions, which include smartphone and online orders, were up 52% from 2019 in November.

For comparison, "card present" transactions – where consumers must swipe their cards at a store – were "only" up 17% from 2019 levels. And card-present spending actually fell two percentage points from the previous month.

This spending data spurred a 5% rally in Visa shares. But the stock is still more than 20% below its all-time high, set in July.

However, nothing has changed in the underlying business...

Visa is still a Global Elite company with an extremely capital-efficient business model. And consumers are using its payments network more and more, adding even more transaction fees to Visa's pockets. The recent sell-off may just present investors with a great buying opportunity.

Sometimes investing is simple.