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3 Payment Stocks Gaining From Improving Consumer Sentiment
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Americans, at present, are feeling much more confident about their welfare. They feel financially secure, and a few are anxious about an imminent economic slump.
After all, the preliminary reading of the University of Michigan’s consumer sentiment index came in at 72.6 in July from June’s reading of 64.4, the largest climb since December 2005. What’s more, the sentiment index is now at its highest level since September 2021.
The report further stated that Americans’ views on current economic conditions climbed to 77.5 in July from a June reading of 69. At the same time, the gauge of consumers’ expectations rose to 69.4 in July from 61.5 in the prior month.
Sentiment improved as prices of gasoline remained unchanged this summer. Most importantly, a strong labor market and a slowdown in inflation consistently boosted consumer sentiment.
The U.S. labor market may have reported a lesser number of job additions in June compared to May, but it’s still above analysts’ expectations. The unemployment rate continues to hover below the coveted 4% mark and average hourly earnings continue to increase.
On the other hand, the annual rate of increase in the prices of indispensable commodities dropped to its lowest level in more than two years in June. A decline in airfares and prices of used cars dragged price pressures down for the 12th consecutive month in June. Inflation, in this day and age, has more than halved from the 40-year high it touched last year (read more: 5 Solid Stocks to Gain on Signs of Inflation Cooling Down).
Now, with consumer sentiment soaring amid steady wage growth, a lower jobless rate, and cooling inflation, household outlays are set to improve. The renewed strength in consumer spending, meanwhile, is beneficial for certain companies like payment processors.
These companies are involved in financial transactions between consumers and merchants and automatically stand to gain in an environment of increasing consumer spending. We have, thus, selected three payment stocks worth a look at as they are poised to show long-term gains in line with an increase in consumer outlays.
Visa (V - Free Report) is a payment technology company that operates across the globe. Investments in digital technology and a healthy cash inflow are some of the tailwinds for Visa.
The company’s expected earnings growth rate for the current year is 14.5%. Visa’s estimated earnings growth rate for the next five-year period is 15.2%. V shares have already gained 15.4% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.1% over the past 60 days. Visa, currently, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Mastercard (MA - Free Report) is another global payment solutions company, whose constant initiatives to upgrade technologies and diversify products promise long-term growth.
The company’s expected earnings growth rate for the current year is 14.6%. Mastercard’s estimated earnings growth rate for the next five-year period is 17.5%. MA shares have already gained 16.4% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 90 days. Mastercard, currently, has a Zacks Rank #3 (Hold).
PayPal (PYPL - Free Report) is also involved in providing online payment solutions to customers and merchants. The increase in payment volumes, at the moment, is benefiting PayPal.
The company’s expected earnings growth rate for the current year is 19.9%. PayPal’s estimated earnings growth rate for the next five-year period is 17.5%. PYPL shares have already gained 16.1% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.8% over the past 90 days. PayPal, currently, carries a Zacks Rank #3.
Shares of Visa, Mastercard, and PayPal, by the way, have gained 17.4%, 15.7%, and 3.2%, respectively, so far this year.
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3 Payment Stocks Gaining From Improving Consumer Sentiment
Americans, at present, are feeling much more confident about their welfare. They feel financially secure, and a few are anxious about an imminent economic slump.
After all, the preliminary reading of the University of Michigan’s consumer sentiment index came in at 72.6 in July from June’s reading of 64.4, the largest climb since December 2005. What’s more, the sentiment index is now at its highest level since September 2021.
The report further stated that Americans’ views on current economic conditions climbed to 77.5 in July from a June reading of 69. At the same time, the gauge of consumers’ expectations rose to 69.4 in July from 61.5 in the prior month.
Sentiment improved as prices of gasoline remained unchanged this summer. Most importantly, a strong labor market and a slowdown in inflation consistently boosted consumer sentiment.
The U.S. labor market may have reported a lesser number of job additions in June compared to May, but it’s still above analysts’ expectations. The unemployment rate continues to hover below the coveted 4% mark and average hourly earnings continue to increase.
On the other hand, the annual rate of increase in the prices of indispensable commodities dropped to its lowest level in more than two years in June. A decline in airfares and prices of used cars dragged price pressures down for the 12th consecutive month in June. Inflation, in this day and age, has more than halved from the 40-year high it touched last year (read more: 5 Solid Stocks to Gain on Signs of Inflation Cooling Down).
Now, with consumer sentiment soaring amid steady wage growth, a lower jobless rate, and cooling inflation, household outlays are set to improve. The renewed strength in consumer spending, meanwhile, is beneficial for certain companies like payment processors.
These companies are involved in financial transactions between consumers and merchants and automatically stand to gain in an environment of increasing consumer spending. We have, thus, selected three payment stocks worth a look at as they are poised to show long-term gains in line with an increase in consumer outlays.
Visa (V - Free Report) is a payment technology company that operates across the globe. Investments in digital technology and a healthy cash inflow are some of the tailwinds for Visa.
The company’s expected earnings growth rate for the current year is 14.5%. Visa’s estimated earnings growth rate for the next five-year period is 15.2%. V shares have already gained 15.4% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.1% over the past 60 days. Visa, currently, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Mastercard (MA - Free Report) is another global payment solutions company, whose constant initiatives to upgrade technologies and diversify products promise long-term growth.
The company’s expected earnings growth rate for the current year is 14.6%. Mastercard’s estimated earnings growth rate for the next five-year period is 17.5%. MA shares have already gained 16.4% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 90 days. Mastercard, currently, has a Zacks Rank #3 (Hold).
PayPal (PYPL - Free Report) is also involved in providing online payment solutions to customers and merchants. The increase in payment volumes, at the moment, is benefiting PayPal.
The company’s expected earnings growth rate for the current year is 19.9%. PayPal’s estimated earnings growth rate for the next five-year period is 17.5%. PYPL shares have already gained 16.1% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 0.8% over the past 90 days. PayPal, currently, carries a Zacks Rank #3.
Shares of Visa, Mastercard, and PayPal, by the way, have gained 17.4%, 15.7%, and 3.2%, respectively, so far this year.
Image Source: Zacks Investment Research