Could Buying Visa Stock Today Set You Up for Life?

Chances are good that there is a Visa (NYSE: V) credit or debit card in your wallet. That's because it counts 5 billion cards in circulation around the world. The payments juggernaut has a presence in more than 200 countries and territories, with trillions of dollars processed each quarter.

Can buying this financial stock today set you up for life?

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Wide moat, huge profits, reasonable valuation

Investors should take a closer look at Visa. There are three reasons this payments giant makes for a worthy portfolio addition today.

The business possesses what is arguably one of the widest economic moats on Earth. This comes from its robust network effect. More merchants increase the value for cardholders, who have a greater number of places to spend. With more cardholders, the ability to generate higher sales for merchants increases.

There's also lock-in from its banking partners, which are tasked with issuing credit cards that run on Visa's network. The moat is entrenched, as the business is critical in enabling commerce globally.

Visa's profitability is incredible. In fiscal 2025, it reported a net profit margin of 50%. It operates an asset-light model, with every incremental transaction carrying high margins because the technological infrastructure is mostly built out. This leads to tremendous free cash flow, to the tune of $2.6 billion in the first three months of 2026. Management funnels most of this to share buybacks. Dividends are also paid out.

Besides the network effect and earnings power, valuation is the third reason to consider owning this stock. The price-to-earnings (P/E) ratio is currently at 31.2. This isn't expensive, and it's in line with the trailing three-year average. Visa's durable success warrants a premium to the overall market.

Expect solid returns

As mentioned, this stock's valuation looks reasonable right now. Let's assume that the multiple remains unchanged in the future, as the current P/E is fair. This means that Visa's profit gains will drive how the shares perform. In the past 10 years, diluted earnings per share grew at a compound annual rate of 16%. I believe the business will produce low double-digit gains going forward, which doesn't imply any rosy forecasts.

Visa is not going to set you up for life. A company's shares would need to have the potential to rise 100-fold in the next 25 years to qualify. Visa just isn't going to do this. To be clear, it's extremely difficult to find any stocks that fall into this category. However, the stock is positioned to generate solid investment gains.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.