Visa Shows Once Again Why It Is the Ultimate Inflation Hedge
Inflation is running rampant in the U.S. and many other countries around the world. The latest consumer price index (CPI) reading for the previous 12 months indicates that prices rose at an 8.2% annual rate in the U.S. on top of a 7% rise in 2021. This is a major change from the past decade, when inflation was relatively stable at about 2% or less each year.
Rising prices can squeeze a business's profit margin. Companies that have major labor, commodity, or transportation costs have generally seen narrowing profit margins this year, which can hurt stock prices. If you're worried about inflation wrecking your portfolio in 2022 and beyond, it might be time to consider buying shares of Visa (NYSE: V) because it actually benefits from inflationary pressures. Here's why.
Visa is the largest digital payments network in the world, processing more than $14 trillion across its various services each year. The company provides a network for almost anything that isn't physical cash payments (including cryptocurrency) and has ridden the transition from physical to digital payments over the past few decades.
Source Fool.com
