While MA is exposed internationally to more than 150 countries, it’s heavily reliant on the U.S. Roughly a third of its business comes from the U.S., which has the slowest volume growth out of any of the markets it services. American Express Company (NYSE:AXP) suffers even more because it’s the biggest U.S. credit card issuer by customer spending. The majority of its business is U.S based. Visa Inc (NYSE:V), on the other hand, is well diversified globally, with no specific focus on the U.S consumer market.
AXP isn’t growing, it’s shrinking. It plans to cut 5,400 jobs this year, because profits declined by 42% in the fourth quarter. In contrast to AXP, MA is expanding. According to its most recent quarterly filing, net revenue is up over 7% since 2012 and operating expenses are up 5.5%. This translates to higher net operating income for MA. But Visa leaves both competitors way behind. In the last quarter, Visa increased its net revenue by a whopping 15%. That’s especially remarkable for such a mega cap company.
The Foolish conclusion
If you believe that inflation, in some form, is bound to hit the markets then you must hedge your dollars. Visa Inc (NYSE:V) is the ultimate inflation hedge – it’s a giant global operator of cheap money across the world, it carries little transaction risk, and it’s well diversified. Invest accordingly.
The article This Company Is the Best Hedge Against Inflation originally appeared on Fool.com and is written by Shmulik Karpf.
Shmulik Karpf has no position in any stocks mentioned. The Motley Fool recommends American Express and Visa. Shmulik is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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