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3 Payments Stocks to Gain From Rise in Digital Payments
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As the coronavirus pandemic has been forcing us to stay indoors and increasingly resort to cashless payments, transactions in the form of cards or e-wallets are becoming a norm. Precautionary measures to avoid physical contact, which increases the risk of COVID-19 transmission, prompted people to avoid cash payments.
Digital payment has been steadily rising in the United States in recent years, with the COVID-19 pandemic fueling the trend even more. In fact, it acted as a major catalyst in its high demand.
Even when the lockdown had just begun, digital payments gained momentum from the growing frequency in online transactions pertaining to online grocery stores, pharmacies, gaming, recharges and utility/bill payments, etc.
More and more people are moving away from cash in-store purchases so that they can prevent “touch”. According to MasterCard Incorporated’s (MA - Free Report) study, this trend is here to stay even in the post COVID-19 world. Per the same study, almost half of the respondents in the Asia-Pacific region confirmed that they are going cashless more often than not ever since the deadly pandemic has struck. Notably, two-thirds of Latin American consumers say, they are engaging in contactless shopping or carrying no cash at all. In Europe, 64% of consumers said that they used digital payment methods to pay in store.
Notably, e-commerce witnessed a surge ever since this pandemic outbreak. Going by Mastercard SpendingPulse (that measures retail sales across all payment types) data, e-commerce spending soared 93% year over year in May 2020. In April and May, e-commerce as a share of total retail sales reached 33% in the United Kingdom, marking an unprecedented high excluding auto, petrol and restaurants.
Apart from consumers, banking organizations are opting for digital payments over contact payment to adhere to the COVID-19-induced social distancing protocol.
Owing to the climbing popularity of contactless payments and the rising adoption of digital and virtual wallets, we expect the leading companies in the payments industry to be poised for growth in the long term.
Moreover, the payments industry is set to thrive on the recently reported strong consumer confidence data.
U.S. consumer confidence improved in May, indicating that life is somewhat resuming normalcy. With the gradual reopening of the economy, consumer sentiment grew bullish in May. Notably, consumer spending is important to U.S. economic well-being given that it accounts for 70% of the country’s GDP.
Payments Industry Set to Thrive
The payments space, which mostly consists of players offering various services in digital, electronic and card payments, saw increased business volumes owing to fast adoption of these hassle-free payment options by consumers.
The shift from cash to a contactless payments industry is well underway and will further flourish, with newer technologies being embraced by its players.
The industry has rallied 7.2% in a year’s time, in line with the Zacks S&P 500 composite's rise.
Stocks on the Watchlist
Let us take a look at the stocks that should remain in focus right now. Here we pick three payment stocks with an impressive earnings surprise and a solid long-term growth rate. All these companies hold potential to retain a purple patch going forward, each currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Global Payments, Inc. (GPN - Free Report) is a leading player in the payments industry, providing payment technology and software solutions, and credit and debit card transaction processing. The expected long-term earnings growth rate is 15.3%, above the industry’s rate of 12.2%. The company has come up with a four-quarter positive surprise of 2.9%, on average. Its bottom line beat estimates in all the trailing four quarters. In a year’s time, the stock has gained 10.3%, outperforming its industry’s increase of 7.1%.
Visa Inc. (V - Free Report) works as a payments technology company across the globe through the transfer of value and information among consumers, merchants, financial institutions, businesses, strategic partners and government entities. Its expected long-term growth rate is 12.6%, above the industry's average of 12.2%. The company’s earnings managed to beat estimates in all the trailing four quarters, the average being 2.2%. In a year’s time, the company has gained 11.2%, surpassing its industry’s growth of 7.1%.
Mastercard provides transaction processing and other payment-related products and services in the United States and internationally. Its expected long-term growth rate of 12.8% outshines the industry's average of 12.2%. Its average four-quarter earnings surprise of 5.5% impresses. The stock has gained 12.3% in a year’s time, outperforming its industry’s increase of 7.1%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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3 Payments Stocks to Gain From Rise in Digital Payments
As the coronavirus pandemic has been forcing us to stay indoors and increasingly resort to cashless payments, transactions in the form of cards or e-wallets are becoming a norm. Precautionary measures to avoid physical contact, which increases the risk of COVID-19 transmission, prompted people to avoid cash payments.
Digital payment has been steadily rising in the United States in recent years, with the COVID-19 pandemic fueling the trend even more. In fact, it acted as a major catalyst in its high demand.
Even when the lockdown had just begun, digital payments gained momentum from the growing frequency in online transactions pertaining to online grocery stores, pharmacies, gaming, recharges and utility/bill payments, etc.
More and more people are moving away from cash in-store purchases so that they can prevent “touch”. According to MasterCard Incorporated’s (MA - Free Report) study, this trend is here to stay even in the post COVID-19 world. Per the same study, almost half of the respondents in the Asia-Pacific region confirmed that they are going cashless more often than not ever since the deadly pandemic has struck. Notably, two-thirds of Latin American consumers say, they are engaging in contactless shopping or carrying no cash at all. In Europe, 64% of consumers said that they used digital payment methods to pay in store.
Notably, e-commerce witnessed a surge ever since this pandemic outbreak. Going by Mastercard SpendingPulse (that measures retail sales across all payment types) data, e-commerce spending soared 93% year over year in May 2020. In April and May, e-commerce as a share of total retail sales reached 33% in the United Kingdom, marking an unprecedented high excluding auto, petrol and restaurants.
Apart from consumers, banking organizations are opting for digital payments over contact payment to adhere to the COVID-19-induced social distancing protocol.
Owing to the climbing popularity of contactless payments and the rising adoption of digital and virtual wallets, we expect the leading companies in the payments industry to be poised for growth in the long term.
Moreover, the payments industry is set to thrive on the recently reported strong consumer confidence data.
U.S. consumer confidence improved in May, indicating that life is somewhat resuming normalcy. With the gradual reopening of the economy, consumer sentiment grew bullish in May. Notably, consumer spending is important to U.S. economic well-being given that it accounts for 70% of the country’s GDP.
Payments Industry Set to Thrive
The payments space, which mostly consists of players offering various services in digital, electronic and card payments, saw increased business volumes owing to fast adoption of these hassle-free payment options by consumers.
The shift from cash to a contactless payments industry is well underway and will further flourish, with newer technologies being embraced by its players.
The industry has rallied 7.2% in a year’s time, in line with the Zacks S&P 500 composite's rise.
Stocks on the Watchlist
Let us take a look at the stocks that should remain in focus right now.
Here we pick three payment stocks with an impressive earnings surprise and a solid long-term growth rate. All these companies hold potential to retain a purple patch going forward, each currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Global Payments, Inc. (GPN - Free Report) is a leading player in the payments industry, providing payment technology and software solutions, and credit and debit card transaction processing. The expected long-term earnings growth rate is 15.3%, above the industry’s rate of 12.2%. The company has come up with a four-quarter positive surprise of 2.9%, on average. Its bottom line beat estimates in all the trailing four quarters. In a year’s time, the stock has gained 10.3%, outperforming its industry’s increase of 7.1%.
Visa Inc. (V - Free Report) works as a payments technology company across the globe through the transfer of value and information among consumers, merchants, financial institutions, businesses, strategic partners and government entities. Its expected long-term growth rate is 12.6%, above the industry's average of 12.2%. The company’s earnings managed to beat estimates in all the trailing four quarters, the average being 2.2%. In a year’s time, the company has gained 11.2%, surpassing its industry’s growth of 7.1%.
Mastercard provides transaction processing and other payment-related products and services in the United States and internationally. Its expected long-term growth rate of 12.8% outshines the industry's average of 12.2%. Its average four-quarter earnings surprise of 5.5% impresses. The stock has gained 12.3% in a year’s time, outperforming its industry’s increase of 7.1%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>