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Topic: Wealth Management

Our stock advice on the best way to cut your risk in the U.S. finance sector

The improving U.S. economy is helping more consumers repay their loans on time. That’s pushing down loan losses at a number of U.S. banks, and improving their profits.

However, the outlook for the U.S. banking industry remains uncertain. High unemployment continues to hurt demand for new loans, and the industry faces greater regulations in the wake of the financial crisis.

Stock advice: Diversification is the key to lowering your risk in the U.S. finance sector

We feel you can cut your risk in this area by adding other types of financial companies to your portfolio, such as insurance firms and credit-card companies. For example, in the latest Wall Street Stock Forecaster we give you our in-depth stock advice on 6 non-bank U.S. finance companies that may be appropriate for your portfolio. One of these companies is Visa Inc. (symbol V on New York).

How Visa’s business model helps cut its risk

Visa operates the world’s largest retail electronic-payments network. The company processes credit, debit, prepaid and commercial payments under the Visa, Visa Electron, Interlink and PLUS brands.

Invest in your Financial Future for FREE

Learn everything you need to know in '9 Secrets of Successful Wealth Management' for FREE from The Successful Investor.

Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.

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The company generates revenue from fees it charges card issuers and merchants for using its network. These fees are based on payment volume, transactions processed and other factors. Visa is a financial intermediary, so it doesn’t lose money if consumers default on their credit-card debt. Banks that issue Visa cards are responsible for liabilities, repayment terms and customer creditworthiness.

Trend toward debit and credit cards favours Visa

The company continues to benefit as consumers switch from cash and cheques to credit and debit cards. The company’s revenue and earnings rose sharply in the latest quarter, mainly due to rising transactions. Visa processed 12 billion transactions in the quarter, up 13% from a year earlier.

Like many U.S. financial firms, Visa is facing increasing regulations. The stock fell sharply in December 2010 after the U.S. Federal Reserve proposed new limits on fees banks can charge for debit-card transactions. Visa gets about 20% of its revenue from debit-card transactions in the U.S.

Get our in-depth analysis and clear buy/sell/hold stock advice on Visa FREE

In the latest Wall Street Stock Forecaster, we take a fresh look at Visa, including its plan for dealing with potentially stricter financial regulations. Our analysis is based on all the company’s fundamentals, including its latest earnings, its current market position, and its price-to-earnings (p/e) ratio (the ratio of a stock’s market price to its per-share earnings). We conclude our analysis with our clear stock advice on whether you should buy, hold or sell the shares.

Best of all, right now you can get this issue, which contains our stock advice on Visa and 5 other U.S. non-bank financial stocks—absolutely FREE. Your free trial also includes 5 in-depth Special Reports and our weekly Email/Telephone Hotlines and much more—all with no cost or obligation.

I urge you not to miss out on this crucial investment advice. Protect and grow your portfolio by taking a no-risk trial to Wall Street Stock Forecaster today! Click here to learn how.

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