Visa (V) has a solid business. The company makes money every time you make a credit card or debit card transaction using one of its cards. There’s also good growth opportunity here because plastic card usage is growing in other parts of the world. This is a fine stock to buy and hold, and if we can get it at a discount that would be even better.
One Year Chart
Visa has been on a steady move higher since busting out in June 2011. At the time the stock had faded from $80 to $75 during May, then in June it popped to $90 and off it went — and hasn’t corrected since. $90 to $180. A double in two years.
The stock looks good now, the problem is 24 times earnings is kinda high for shares of Visa. Back in Q1 2012 the stock had a P/E of 20. I would like to pay 20 times earnings for Visa now.
Fair Value
This stock is really worth around 25 times earnings. Visa typically beats the street by a little and has upped annual profit estimates around a dine each time its reported profits during the last year. A dime times four is a forty cent increase in a year — that keeps the stock moving higher.
Sharek’s Take
Like many stocks, Visa has risen and now is selling around where it should be. The two-year run higher makes me thing a correction is needed to flush out some investors. Stocks with perfect charts often turn little corrections into larger ones.
Visa is at the top of my radar, but I’m holding off buying for now in the hopes of a better entry point. $165 is 22 times earnings, and also looks to be above the recent low.
View the Earnings Table here.View the Ten Year Chart here.
