Visa Inc. (V)

Shorting and covering? The bigger trend on the stock is not bad. The chart shows that this is definitely overbought. Technically speaking, he does not like shorting stocks in an uptrend. Possibly a cover might be at $228. Watch momentum oscillators for a round over, and then short them and cover at $228. There is a lot of risk in shorting.

There was no domestic acceptance of Visa last year, but in the last couple of weeks they announced they are opening up the payment market. This one should be a big deal for this company, but they will have to go through a penetration processes. You have no exposure to payment defaults. They are just a transaction processing company. It is a very expensive story. Longer term you will be okay. The valuation is very expensive.

Chart shows it had been consolidating for a while and then had a parabolic move in October. This is probably a very overbought stock. If so, you would want to wait and see if it pulled back a bit.

Own the credit card companies rather than retail companies because that is where the money is made. It continues to do really well.

Biggest jump in 3 years today. He has been a big fan of this area. He thinks there will be no cash in the future. We will be a cashless society. The long term is great.

Visa (V-N) and MasterCard (MA-N) are very similar financial profiles, so whether you purchase one versus the other, they are both good names. This is a very strong long-term name to own. Lately some of these credit card companies have not done as well as some of the lesser-known credit card companies. This is a decent name to own long-term. You are going to get 50% growth rate, and it’s trading at 20X PE right now.

The trends going forward make a lot of sense for this company. Less people are going to be using cash going forward. There is inflation protection built-in. As you spend more money and prices rise, they make a higher transaction, because it is all based on volume.

About the only thing that he doesn’t like about this company is the price. This is a long term way to play the global consumer. A very interesting story. This is one that you buy and hold for the long-term.

NFC payment though phones looks somewhat promising. V & MA are both well placed. He is watching it and looking for weakness.

(Top Pick Oct 4/13, Up 12.90%) MasterCard is more expensive than this one. They take on no credit risk. They are a transaction company. While eBay splits off PayPal, Visa is in the sweet spot. Their volumes should increase.

This has run into some of the geopolitical issues in terms of what is happening out there. Trading at 21X forward earnings and expected to have a 15% + long term growth rate. 1.2X PEG ratio, which is not bad for such a household dynamic global name. Very strong cash flow business. There is a secular trend of not using cash, so this company is going to benefit. There are also growth prospects in the developing markets. He prefers Mastercard (MA-N) because it is a little bit more international.

There are challenges to the credit card space as to fees with merchants fighting back. We may have seen the best part of the curve. There is a lot of growth priced into the stock.

This would be a good time to enter. This is a provider of an electronic platform for financial institutions, who want to have payment systems related to debit cards, credit cards, prepaid cards, etc. This is a transaction business, so the more transactions, the better. Looking at the growth in emerging markets, it is more of a secular story as market penetration is no where near what it is in developed markets.

Hit hard during the Ukraine/Russia crisis. Now it is in the market that Russia will develop their own network. Visa is a play on the move to a cashless society. 37% of payments are still cash in the developed world. In the developing countries it is 57% so there is a lot more room for non-cash payments to increase. Visa is the largest and has the lowest cost infrastructure and competes most effectively.

A great company and has done very well in the last 3-4 years. If you want to own this, he would take a really small position. If the current litigation goes against them, then you might add more. Growth has been good and this is well-run.