Visa: Trading Transparency 52 comments
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Part of my portfolio management strategy involves dealing with sales at the extremes of my portfolio size. For me, my minimum number of holdings is five and my maximum is twenty. I try to 'float' my portfolio between these two extremes based on the activity of my own stocks. In this case, sitting at five positions, my minimum, the sale of a portion of Copart (CPRT) gave me a signal, or 'permission slip' as I sometimes write, to be looking for a new stock to buy. And thus, as I have written before, with that nickel burning a hole in my pocket, I set out to find a new stock to purchase.
Checking the list of top % gainers on the NYSE earlier today, I saw that Visa (V) had made the list. However, the other stocks moved higher and V sold off a bit, so by the end of the day it was no longer on the top % gainers. However, by that time I had already purchased 70 shares at $85.92 for my trading account. Visa (V) closed at $85.25 up $3.33 or 4.06% on the day.
Let's take a closer look at this stock and I will try to explain why I purchased shares and why I rate Visa a buy.
First of all, according to the Yahoo "Profile" on Visa (V), the company.
...through its subsidiaries, operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities in approximately 170 countries and territories.
And how did it do the latest quarter?
On April 28, 2008, Visa (V) reported strong 2nd quarter 2008 results. Revenue and net income rose strongly with net income climbing 28%. The company beat expectations coming in with adjusted earnings of $.52/share ahead of Thomson Reuters' consensus of $.46/share. Revenue climbed to $1.5 billion ahead of expectations of $1.45 billion.
The stock actually dipped on this report since it is a relatively recent IPO, having come public on March 18, 2008, and having climbed sharply from the $44/share level with a 66% increase at the time of the earnings announcement.
Looking longer-term at the Morningstar.com '5-Yr Restated' financials page, we can see a steady increase in revenue from $1.98 billion in 2003 to $3.59 billion in 2007 and $4.8 billion in the trailing twelve months (TTM). There has been an increase from 1.02 billion shares in 2007 to 1.53 billion in the TTM. I assume this is related to the recent public offering of shares.
The free cash flow numbers suggest a one-time dip in free cash flow with $8 million in 2007 dipping to a negative $(20.9) billion in the trailing twelve months. Quite frankly, I didn't pay a lot of attention to this figure at the time of purchase (?). I don't think it is a problem, but would wait for updated Morningstar.com figures as things progress.
So while the Morningstar.com page is a bit incomplete from my perspective, the recent quarter was strong, I am well familiar with this particular franchise :), and the chart looks great.
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This article has 52 comments:
For share-owners wishing to discuss all things Visa, as well as info for other emerging opportunities, come on over to visaglobalwinners.blog... We'd love to see you there!
when it drops again I will consider a re entry position
Come on over to the site I mentioned above for research, opinions and other ideas related to Visa and other emerging opportunities.
schooledrider, looks like hindsight is always 20/20, so lesson learned. you should just sit back and relax now. Just hang on for the ride long term and you'll do just fine.
willking: keep up with that defiant attitude! :) Really, do your own research, learn as much as you can, and make an informed decision. In this case the decision should be to sit still!
coeus89: good for you! I wish I were smart enough to get started that young, really. Don't worry about the # of shares you have, we all have to start somewhere. Many are lucky to own 1. So don't worry. You've got a great start!!
I saw yesterday that someone bought 350,000 shares of Visa at $85. I'd love to hear THAT person's take!
Like the rest of you, I sweated (slightly) through that short lived pullback of ten dollars. Visa charged back quickly on the heels of Mastercard's reporting. I wouldn't look for a pullback in to the 70's anytime soon. I think it's a good entry price right now! The key is hanging around long enough for the stock to break out and I dont see why it shouldnt. I'd be surprised if it doesnt hit 100 quickly and possibly 150 to 200 by year's end. GO VISA!!!
Like in Fiddler on the Roof, 'when you are rich, they really think you know!'
I have other investments such as retirement vehicles and the like. Before you dismiss my comments because of such an honest expression of poverty, drop by my blog and see what you think. You might be surprised. But then again....
Bob
Whatever happened to VWinner? He's a good V motivator.
Be grateful for what you have.. there's no need to slam someone else for having less than anyone else. Again, we all started somewhere. I'm happy I can buy even 1 share of Visa!!
Robert: Keep up the good work, keep the information/data flowing, and thanks again for sharing your article.
You guys can find V Winner and some other of us 'old timers' over at visaglobalwinners.blog... . He's a little busy at the moment with real world stuff, but he's still around (we won't let him go!!) We share data and opinions about Visa over there for share-owners, and will hopefully branch out somewhat and discuss other emerging opportunities as well. But the core is Visa!! WOOHOOO!!
Have fun with it, think long term and don't fear the plunges. Visa isn't a dot-com so it's not going bye-bye overnight and will only grow stronger!
big O: glad you decided to stay in for a while!
Anthony: I know what you mean, but we all have to pay uncle sam! I'd advise anyone that doesn't currently have a CPA to run out and get one, especially if they are trading any stock. There are too many tax implications that we'll never understand!
My advise is to play them conservatively, and only with money you can afford to lose. If you turn out a winner on them, great, but be prepared to lose some too! I've made plenty but I've also lost quite a bit playing options.
Regarding option strategy, why not sell a put, collect the premium, and in worst case, get the stock below current price. Also one of my strategies...
Nice comments from everybody.
Minimum Expenses. V should keep flying.
Next week when it go down than I will buy back again. hit and run
is more fun.
I dunno....good company...but I am not feeling the price of it.
using a 2.03 EPS for 2008.....and a 20% growth rate.....the fair value at the end of 2008 is $53/share.
MA fair value at the end of 2008 given 20% growth is $228/share.
possibly they always trade at a premium? I dunno....just seems expensive.
When everybody is thinking one way, I think that should be viewed as a big yellow flag. If I held some V I would be much more interested in visiting the "Why Visa Sucks" website to pressure test my hypothesis than being part of the Visa lovefest cult.
Not long ago, the world start to know Google.
Today, the world start to know "Cash to Card Transition", leading by Visa then MA.
When we talk about investment, dunno then don't buy, worried then don't buy, so u won't lose your sleep, but don't kick up yourself later on, at least you have a good sleep.
I'm with you. Judging from the enthusiasm on here I wouldn't doubt this a thirty something stock within a year.
On Jun 01 11:45 AM markb wrote:
... If I held some V I would be much more interested
> in visiting the "Why Visa Sucks" website to pressure test my hypothesis
> than being part of the Visa lovefest cult.
//////////////////////...
So, wanting to see the "Why Visa Sucks website," I went there and look what I foung in the first paragraph: "Being someone who has never had (because he’s never been offered) plastic, and lacking a bank account.."
NEVER OFFERED PLASTIC?
You simply go to your bank and apply for "plastic."
But, that isn't possible for someone who doesn't have a bank account.
It must be a blast to go down to the local currency exchange once a week to cash your paycheck and have all those money orders made up to pay your bills.
Could it be that you do not have a bank account because you once had a checking account and couldn't understand how you could be overdrawn when you still had unused checks in your check book?
Last thought: Visa thirty something? Yes, as in One Thirty Something!
Nine
I firmly believe that the market is manipulated and IMO the big guys get advance notice before the rest of the suckers hear anything. I've noticed increases in a stock from out of no where for 3 or 4 days with no apparent reason behind it and then, BAM an announcement comes out (that you weren't privy to) and the stock barely advances because the insiders already made all the profit. That old cliche of "Buy on the Rumor, Sell on the News" really means "We already took the profit and we are waiting for you to get the good news because when the news comes out WE ALREADY SOLD!" I think it's a stacked deck.
Part of Visa taking off like it did is all the HYPE. Personally, I dont care if people want to hype a stock as long as I can make money on it. I bought a LOT of Visa and I hope all the back-slapping and pep rallying continues. However, I dont kid myself that the slime can hit the fan when the market movers decide that the stock is played out. Just be sure to COVER YOUR REAR. Dont be fooled by the people who keep shouting LONG on VISA, or LONG on MA, or LONG on XYZ. Those people arent going to send you a refund if the stock falls off the board.
That said, I think Visa is as good a stock as any. It's a great company with a huge market share and IMO should grow like crazy in the developing world. Sometimes, the biggest risk is NOT TAKING a RISK. I'll hold it a year to avoid the capital gains but NOT if it doesnt climb a couple of bucks a month! And if the quarterly report comes out soft I'M GONE!!! That said GO VISA (lol)
On Jun 02 06:09 PM frankmeister wrote:
> Just remember that picking stocks is no different than gambling.
> You do the best you can to pick a winner. Due diligence involves
> reading the company prospectus, reading analyst's opinions, studying
> quarterly results, etc. The only thing that makes a stock increase
> in value is the belief that the company will be making more money
> in the future. Valuations can seem too high but then the next quarterly
> report comes out and says that the company exceeded analyst's expectations
> by twenty percent and bingo! The stock rises 20% (or more). HOWEVER.
> You pretty much are at the mercy of the people that run the market.
> If bad news or rumors come out, shazam, your stock can drop like
> a rock. Ever wonder why the stocks creep up slowly in value but
> when it comes to DROPPING in value, the descent is lightning fast?
> Ever wonder why your guy at Morgan Stanley or Schwab or Lehman Bros
> tells you not to sell? Ever consider that possibly he wants you
> to HOLD so he can SHORT your shares?
> I firmly believe that the market is manipulated and IMO the big guys
> get advance notice before the rest of the suckers hear anything.
> I've noticed increases in a stock from out of no where for 3 or 4
> days with no apparent reason behind it and then, BAM an announcement
> comes out (that you weren't privy to) and the stock barely advances
> because the insiders already made all the profit. That old cliche
> of "Buy on the Rumor, Sell on the News" really means "We already
> took the profit and we are waiting for you to get the good news because
> when the news comes out WE ALREADY SOLD!" I think it's a stacked
> deck.
> Part of Visa taking off like it did is all the HYPE. Personally,
> I dont care if people want to hype a stock as long as I can make
> money on it. I bought a LOT of Visa and I hope all the back-slapping
> and pep rallying continues. However, I dont kid myself that the
> slime can hit the fan when the market movers decide that the stock
> is played out. Just be sure to COVER YOUR REAR. Dont be fooled
> by the people who keep shouting LONG on VISA, or LONG on MA, or LONG
> on XYZ. Those people arent going to send you a refund if the stock
> falls off the board.
> That said, I think Visa is as good a stock as any. It's a great company
> with a huge market share and IMO should grow like crazy in the developing
> world. Sometimes, the biggest risk is NOT TAKING a RISK. I'll hold
> it a year to avoid the capital gains but NOT if it doesnt climb a
> couple of bucks a month! And if the quarterly report comes out soft
> I'M GONE!!! That said GO VISA (lol)
June 3, 2008. Visa UP 1.44% Mastercard down 3.44% Your solar play FSLR down nearly 7% for the month and nearly 4% for the year. So as I said, YOU KNOW NOTHING, and should blow me.
I like your post about stocks falling and nobody giving you refund. Well said. I too have been on the bandwagon on Visa. The stock is highly overvalued.....the PE ratio dont lie. I am just waiting for for V europe to join the mix and for V inc to buy back some shares once these 2 things occur the price should shoot up to around $100 and then i may consider selling....b/c by then i would have made over 80-90% of return on my large investment.......you wont ever see that type of return in visa after that.
The 10-20% growth Visa has claimed for the next 5-10 years is already factored into the stock (hence the high PE ratio). But i dont think the situation of Veurope joining Vinc and buying back of shares are factored into the current PE....if it was then the PE ratio would be almost 10-15 pts higher than MA. Currently its only 3-4 pts higher than MA. Apparently in october they will annouce the buy back of shares and V europe to join V inc.
Currently I have sold my entire position @ 51% profit and looking to re enter as a demarcation line shows itself to me...Longterm I see cash disappearing and as consumer goods and gas toils upwards I see the use of CC's being used more and more to make ends meet.
great job pumping the stock! if this site had ethical oversight you would have been kicked out of here.
who's backing you? russian mafia, or maybe just V itself?
there are people like you all over the net who con gullible inexperienced stock traders into throwing their money away. But speaking of that--how many of these other so-called retail investors posting here are really that, and not friends of yours?
If V shoots up, then you'll say "I told you so." But if it tanks, then you won't be around. But you will have made your money already pumping-and-dumping.
If this site had ethical oversight, the site itself wouldn't exist since even the writers of these articles don't have ethics and yet they still publish much of this drivel and who is to say that that doesn't move markets or con gullible stock traders?
From what I can tell and have read, Cat just has taken more of her time to post than many of the rest of us here. But we all believe in V. What's not to get excited about? V is a winner and most informed people, once they get it, can see it for themselves as well.
visaman: thanks for that. you know how much research I do. Perhaps I should just go back to posting up what I do best.. finding and sharing data.
And on that note:
Here's a link to the Webcast of VISA at the UBS Electronic Payments Summit from June 4, 2008. Elizabeth Buse, Global Head of Product for Visa, is the speaker. The audio is approximately 30 minutes long. It updates Visa's stats and other info that we last heard about during the Q2 earnings report.
For Real Media Player: events.streamx.us/US/e...
For Windows Media Player:
events.streamx.us/US/e...
We don't get to hear from these folks very often, so it's always very informative when we do.