As you may notice there are tons of businesses that come and go, but here are 2 company stocks Visa (V) and Amazon (AMZN) that we think may be beneficial this decade.
The key characteristics of companies that can stand the test of time include a long runway for growth, a dominant market position, and a large and untapped addressable market. Although such companies are often not cheap when assessed using normal valuation metrics, their consistency and stability assure investors that they need not lose sleep over their portfolios.
Amazon (AMZN) Stock
Amazon.com is one of the largest e-commerce and technology companies in the world. The Seattle-based company started in 1994 and, under the leadership of CEO Jeff Bezos, has grown into a behemoth over the last two and a half decades. Amazon clocked up net sales of $75.5 billion during the previous quarter, up 26.6% year over year, while generating trailing twelve-month free cash flow of $24.3 billion.
Amazon’s dominance should allow it to continue to grow over the long term, as more countries industrialize and more consumers switch to e-commerce. With the COVID-19 pandemic, the shift to online shopping has accelerated at an even faster pace. The company has even been hiring during the pandemic, with tens of thousands of openings even as jobs are being lost at a record pace in the U.S.
Amazon has also committed to spending a whopping $4 billion on COVID-related expenses to stock up on personal protective equipment for its employees and conduct enhanced cleaning of its premises. This initiative is admirable as it shows how the company prioritizes the safety of its employees and is intent on ensuring that its business is not adversely affected by the ongoing pandemic.
Visa (V) Stock
Visa is a global payments giant that has demonstrated consistent growth since its IPO in 2008. For the second quarter of the fiscal year 2020, Visa handled a total of $2.1 trillion worth of payments, growing 3% year over year. Though payments volume suffered during the quarter (especially in March when the pandemic worsened considerably around the world), net revenues still grew 7% year over year during the quarter, while net income grew 4% year over year.
The growing trend toward cashless payments is a long-term tailwind for Visa, even though a sharp short-term drop in spending will negatively affect revenue and net income. As more people around the world are connected to the internet through their mobile devices and laptops, the demand for payments using debit and credit cards will also increase.
In January this year, Visa signed an agreement to acquire Plaid for $4.9 billion in cash, a network that makes it easy for people to securely connect their financial accounts to the apps they use to manage their finances. The acquisition, along with others such as Verifi and Payworks made in 2019, adds to Visa’s growing capabilities and expands the company’s ecosystem of users. The company’s strengthening moat will ensure that it can continue to grow and capture more customers over the long term.
