Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Visa Inc (V): This Company Is the Best Hedge Against Inflation

There’s a heated discussion going on whether the massive money printing by the Fed will cause interest rates to rise, or whether now is a good time to buy treasuries after their prices crashed in the past two weeks. But there’s one aspect where there’s a general consensus in the markets. If the Fed continues with his purchase of $85 billion worth of treasury notes for much longer, the value of the U.S dollar will eventually evaporate. The combination of a zero percent interest rate environment combined with a government balance sheet loaded with debt is extremely lethal. But In times of cheap and easy money, there’s one sector that does exceptionally well.

Who benefits from too much idle money?

Visa Inc (NYSE:V)

Visa Inc (NYSE:V) operates the world’s largest retail electronic payments network and manages the world’s most recognized global financial services brand. The great thing about credit card companies is that the financial institutions that license their brand do so on the basis of transaction volume. The more money people spend on their Visa-branded debit and credit cards, the more money Visa earns. You must understand that Visa Inc (NYSE:V) doesn’t hold any of the debt put on those cards. It merely licenses the brand and receives a fee for processing the transactions. All the fun, with no worries. That’s why credit card companies are such a great business.

In other words, the more money that exists, the more money Visa Inc (NYSE:V) will make. It’s perfectly correlated to inflation. And I believe that Visa has the most to gain from inflation out of all of the credit-card networks.

A superior brand

Visa isn’t alone in the credit card business. Its two very dominant rivals are Mastercard Inc (NYSE:MA) and American Express Company (NYSE:AXP). I believe that in the long haul, Visa will outperform both of them for the following reasons.

Size matters

Visa Inc (NYSE:V) is the largest of the three, by far. At a market cap of $125 billion, Visa is three times the size of Mastercard Inc (NYSE:MA) and American Express Company (NYSE:AXP), combined. Just to get a feel for the numbers, last year Visa Inc (NYSE:V) processed more than $3.8 trillion from more than 50 billion separate transactions. American Express processed only 5 billion transactions worth $808 billion. According to Visa’s 10-K, the firm has twice the number of cards issued over Mastercard Inc (NYSE:MA), its closest competitor, with almost 55% higher payments volume. Currently, Visa Inc (NYSE:V) has more branded credit and debit cards in circulation than anyone else. More cards and more payment volume mean more profits.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.