The market selloff in December is so widespread that even payment processing firms are falling. This is one area of the market where stocks should not fall. Electronic payment services, online payment processing, and credit card transactions keep growing.
Even a mild recession in the U.S. should not hurt this sector by that much. The permanent shift from the traditional use of cash towards electronic payments suggests that investors should keep a position in this sector.
Visa (NYSE:V), which is set to report quarterly results on Jan 23, 2019, has potential upside if it reports strong holiday transaction numbers.
Mastercard (NYSE:MA), which is similarly valued from a P/E perspective, would rebound too.
PayPal (NASDAQ:PYPL) is even more likely to beat expectations when it reports on January 17. But the stock punished the most is Square (NYSE:SQ), which topped $100 in October and fell to $52.51 last week.
Square has a distinct advantage over the above-mentioned firms. It helps small businesses process transactions. And it keeps its fees low to help businesses grow, instead of hampering them with high costs.
Takeaway
Selling pressure in these payment firms will continue if negative market sentiment picks up. This creates a perfect time to start a position in any of those stocks, especially with Square.
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