Visa Stock Rises On These Improving U.S. Consumer Trends

Visa (V) reported improving U.S. payments volume trends in May, suggesting consumers are beginning to spend more. Visa stock rose.


The Dow Jones stock saw total U.S. payments volume in May decline slower than in the previous two months, when social distancing and stay-at-home orders to minimize the spread of the coronavirus took their biggest toll.

May payments volume fell 5% year over year, far better than April’s 18% drop. E-commerce transactions jumped 18% in May. They have been growing rapidly during the pandemic as consumers turn more often to the internet to buy goods amid broad lockdowns.

The firm said U.S. payments volume improved by more than 20% for the food and drugstores, home improvement and retail services categories. There were less marked improvements for automotive, retail goods, telecoms and utilities.

Payments volume in the business supplies, department stores, education & government and health care sectors saw less severe declines, up to 20%. But international markets, where Visa processes the most transactions, were lagging behind the U.S. in May.

“The continued distribution of Economic Impact Payments and the relaxing of shelter-in-place restrictions in a number of states are driving these trends,” Visa said in its an SEC filing.

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Shares closed up 1% at 196.36 on the stock market today. Visa stock is just out of a buy zone after breaking out of a cup-with-handle base, MarketSmith analysis shows. The ideal buy point was 185.85. It is trading above its 50- and 200-day lines, which is a positive sign.

The relative strength line for Visa stock has been rising since late April, though its has been moving sideways in recent weeks. It has managed to make progress in 2020, despite the tough environment. This reflects the stock’s performance compared to the broader S&P 500 index.

Visa has a very strong IBD Composite Rating of 94. The Stock Checkup Tool shows earnings growth is a key strength for the Dow Jones stock. Over the past three years EPS has swollen by an average 23%. While that’s just below CAN SLIM requirements, it is good for such a large company.

Visa’s update comes after the firm’s archrival Mastercard (MA) last month reported a slight rebound in credit card use amid a relaxation in social distancing rules and fiscal stimulus.

Among other payments stocks, Mastercard rose 0.7%. Digital payment processor PayPal (PYPL) was up 1.9%, and rival Square (SQ) surged 6.4%.


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