Credit card giant Visa Inc. (NYSE: V) last week took over the top spot as the best performing Dow Jones industrial average stock for the year to date. The stock posted only a slight gain, one of only eight Dow stocks to show some life in what was a down week for the index. Visa shares added just 0.2% last week but have gained 18.7% for the year to date.
The second-best performer among the Dow index equities so far this year is Nike Inc. (NYSE: NKE), which is up 17.39%. That is followed by Microsoft Corp. (NASDAQ: MSFT), up 17.38%, UnitedHealth Group Inc. (NYSE: UNH), up 19.4%, and Boeing Co. (NYSE: BA), up 14.9%. Of the 30 Dow stocks, 11 have managed to post a gain to date in 2018.
The Dow struggled through a tough week and dropped more than 500 points to close at 24,580.89, down about 2%. For the year to date, the consumer discretionary sector has added 12.9%, displacing tech as the best market sector so far this year.
Looking back over the news for the week it’s hard to see any single event that made much difference to Visa’s share price. There wasn’t even any significant economic news that would have moved the stock much.
What does seem to boost investors’ spirits is the robust U.S. economy and Visa’s position to benefit from that economic boomlet. More Americans are working, wages are inching up and the tax cut has put a little more cash in the average person’s wallet. And they’re spending that cash on something other than higher-priced gasoline.
Consumer discretionary companies are now topping the list of best-performing equities sector. Retail sales have been up for the past two months. The link to credit card and financial services companies is not difficult to discern.
So even though Visa’s share price growth was modest, the company appears well-situated as the summer vacation season kicks into high gear. Spending on travel and discretionary goods is likely to rise, and Visa should get a nice chunk of the action.
Visa’s shares closed up about 0.6% Friday to $135.33, in a 52-week range of $93.19 to $136.69. The consensus 12-month price target on the stock is $144.36, and the forward price-earnings ratio is 25.78.