Some companies, for better or worse, just never seem to get to a level that long-term investors would consider "cheap," or at least, cheap enough to consider. Companies with high growth rates tend to demand higher valuation multiples, putting such companies always out of reach. Of course, when crises like the COVID-19 outbreak arise and knock valuation multiples down a few pegs, the future may just seem too bleak to add a position in such a company, for fear its share price would undoubtedly decline further.
As is the case with credit processing company Visa Inc. (NYSE:VISA), a company I’ve looked at for a long time, but never bit due to its valuation. The blue chip giant has seen its stock price but in half from its all-time highs in recent weeks as investors continue to price in and estimate the ultimate impact the COVID-19 outbreak will have on transaction volumes as unemployment rises and businesses go bankrupt across most countries.
There will undoubtedly be a slowdown in years to come, and I would expect to see continued volatility in financial markets for some time. Transaction volumes will drop and the forecast for long-term earnings growth may seem bleak. That said, Visa’s core business is supported by strong secular growth trends that I do not see slowing in most emerging markets (who doesn’t want a credit card?) which in many cases have had low penetration rates in the past due to lacking infrastructure, which happens to be continuously advancing forward.
Invest wisely, my friends.
Tech Insider
