Sunday, October 25, 2015

"This week the stock market doled out rewards and punishment with great clarity in regards to measuring stock prices. Amazon, Google, Netgear and Microsoft getting rewarded with gains and with Chipotle, Community Health, Pandora and Skechers getting taken down substantially in price. My pick this week, Visa (symbol V), has not been known to disappoint."

Dow Jones Industrial Average 17,646.70  (UP) Week ending 10/23/2015

This was a week in the market where there was no middle ground. If you did good, you were rewarded handsomely with a tremendous gain in stock price. If you did bad, on sales and earnings reporting, no quarter was given, and ETF's and institutional sellers came in pounding your stock price down, selling without showing any mercy. 

This has been a year of rotating financial stocks for me. I started with Discover Financial which although a great value it never made any headway in the stock market. I sold that 4 months ago and moved that money to American Express, another great value stock on paper. Luckily I dumped that on the afternoon before they reported earnings this week, where they were punished for a revenues and earnings miss and taken down 8%. 

 I decided to move into Visa (Symbol V, $77.07) which has done very well this year. The PEG ratio on the stock is higher than I like to pay, listed at 1.64 and 2.14 on two different websites. I do not like to pay over 1.5 PEG , but I decided that I needed to pay a premium to get into a better financial growth name in the space.  ROE on the stock is 21.01%.

VISA has been a stellar performer with a 1 year gain of 43.87% and a YTD gain of 17.57% and a 1 month gain of 8.63% , all according to the CNBC mobile website. Revenues are growing at 12% a year and Net income is growing at 16.36% per year.

VISA which operates in 200 different countries has just boosted their dividend up by 17% and it now returns 0.73%. The company has $39.429 Billion dollars in assets and has Zero Long Term debt. The Quick Ratio and the Current Ratio are 1.59 to 1.00, very solid numbers financially.

USAA has just announced that they are moving all their credit and debit cards over to Visa from Mastercard. Visa is also on the forefront of card "Chip" technology which should improve margins. 

Earnings at the company are growing at 11.6% per year and for 3 to 5 year it has been 20.4%. The forward PE on the company is 29.17 so it is valued like a growth stock.

Analysts are 17 Buy , 4 Out Perform, and 2 hold. This stock is a little more richly priced than I normally buy but I think it is necessary to own a good quality stock in the Financial area as a strong long term hold.

So buy some VISA stock, then relax and have yourself a nice meal, get a good night sleep, and wait for your stock to rise up in value. Visa is a good 1-3 year investment suitable for any investment account.

Hope your Fantasy Football team is doing good on this wonderful autumn day and have a great investment week,


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