Companies that build out a successful leadership role tend to keep it over time. They don’t necessarily keep competitors at bay. Rather, they look at trends and adapt to them as needed. And given their existing size and cash flows, doing so allows them to roll with market changes.
For instance, the rise of cryptocurrencies could lead to alternative payment systems that are cheaper to use and can move money internationally in the blink of an eye.
That’s potentially bad news for financial companies like Visa (V) which benefit from operating a credit card network that provides capital now that has to be processed later.
However, Visa is investing in the digital payments space along with competitor PayPal (PYPL). That could allow it to keep, if not widen, its lead in the payment space in the years ahead.
Visa looks reasonably valued now at 24 times earnings. That’s a slight premium to the market. But if it can continue to be an industry leader as digital payment systems change, shares can continue to grow over time.
Action to take: Long-term investors may want to buy some shares now, and use market pullbacks to buy more. Visa has a 0.75 percent dividend yield at current prices, and there have been some increases over time.
For traders, the December $250 calls, last going for about $8.60, could leverage a continued move higher in shares for mid-double-digit returns by the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.