Is It Too Late to Get In On This Millionaire-Maker Stock?

Since it went public in 2008, payment processing giant Visa (V 0.33%) has delivered returns that have been nothing short of extraordinary. The stock's price has risen by 1,280% in the roughly 12 years since going public, and including dividends the total return jumps to 1,400%. It's fair to say that Visa has made some millionaires out of its early shareholders.

Although the performance so far has been incredible, there's a strong case to be made that Visa could still be a smart growth investment to own for the next 12 years -- and beyond.

Image source: Getty Images.

What has fueled Visa's amazing returns?

To make a long story short, Visa has been a huge beneficiary of the trend toward cashless payments, also known as the "war on cash." Just take a look at how Visa's business has grown over its time as a publicly traded company:

Data source: Visa earnings releases.

Let that sink in for a second. There are nearly 2 billion more Visa-branded debit and credit cards in existence than there were 12 years ago. Payment volume through Visa's network has nearly quadrupled and revenue has grown by 343%. That's why Visa's stock has performed so well.

The shift toward a cashless society has accelerated in the past decade or so. Technological innovations from fintech companies like Square (NYSE: SQ) have made credit card acceptance much more common among businesses large and small. Meanwhile, cash has become less convenient to obtain and use in many situations.

Is it too late to get in on Visa?

While the COVID-19 pandemic has clearly not been kind to most stocks -- especially those that rely on the ability and willingness to spend money, like Visa -- the company's growth story could still be in its middle innings.

There's still plenty of cash usage taking place, particularly in international markets. It has been estimated that as many as 80% of payment transactions worldwide still take place in cash. We tend to think of credit card acceptance as a near-universal thing (and in the United States, it largely is), but that's simply not the case around the world. In fact, Visa is in the early stages of developing its presence in some of the most populated areas of the world.

Plus, Visa is currently focused on the credit and debit card portions of the payments industry, but there are several other parts -- particularly person-to-person payments -- that it could leverage its massive network on.

Don't expect a 10-bagger, but that doesn't mean it's too late

It's true Visa isn't likely to replicate the performance of its first 12 years as a public company over its next 12. It's simply getting too big -- another 10-bagger return would make Visa a $4.2 trillion company.

Having said that, don't make the mistake of thinking you're too late to put your money to work in Visa. The company estimates the worldwide payments market at $185 trillion in size, and Visa's current annualized (pre-pandemic) payment volume translates into less than 5% of this amount. So, while it isn't realistic to expect Visa to replicate its massive gains of the past, there's no reason the company can't continue to produce market-beating results for years to come.