Visa (V) — a conservative pick for 2022 — was hit hard in October after the company released a disappointing quarterly report, recalls Timothy Lutts, editor of Cabot Stock of the Week.

The stock was then hit again in November after Amazon (AMZN) announced it would stop accepting Visa credit cards issued in the U.K. starting in late January 2022. By the start of December, this one-two punch had knocked the stock down 25% from its high — and that was bargain basement territory for one of the largest payments companies in the world.

To be clear, Visa does not issue credit cards; banks do that — and assume the risk. Visa simply processes transactions, and takes a cut, just like a middleman in any business. But in the global payments industry, true competitors are few and far between. Visa is here to stay. And the stock yields 0.7% too!

On the positive side of the ledger is one huge trend, the trend toward cashless digital transactions. This trend, of course, is well advanced in developed countries; Visa provides services in more than 200 countries and in over 160 currencies. But in developing countries, there is still huge progress to be made, and there’s no question Visa will be there.

On the negative side, this is competition building from cashless payments technologies — including cryptocurrencies — that bypass the traditional networks developed by Visa, but such competition is still very small, and I have little doubt that when management thinks it’s worth their trouble, they will delve into this area as well.

The numbers look fine. In the latest quarter, revenue was $6.6 billion, up 29% from the prior year and up 7% from the prior quarter, while earnings per share hit $1.62, up 45% from the prior year and up 9% from the prior year. Going forward, the average analyst sees earnings growing 19.3% next year and 17.7% over the next five years. This is a very predictable stock (with the exception of the occasional shock like the two the stock recently received).

But that’s made the stock a bargain, so this is your opportunity. 

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