Visa Inc. (V)

He is a little uncomfortable. They are getting a little more global competition and he doesn’t know exactly where they are ultimately going to land in terms of cell phone payments. They are not as well positioned. However, they have picked up a lot of market share from MasterCard (MA-N) and particularly American Express (AXP-N) over the past couple of years. A 20 Plus multiple stock and the growth rate is slowing down.

It has been testing a trend line and doing so positively. You will do fine with this one if you are a long term holder.

Strong seasonality from end of Jan. to May of each year. We have gone beyond the period of seasonal strength for this one. It has broken a short term trading range and established a downward trend. They may have a difficult time having good earnings going into the third quarter. A word of caution here.

This has almost a duopoly for card payment processing globally. Recently completed the purchase of Visa Europe, and completed it at a time when there was turmoil. This has never been cheap, always trading at a 20+ multiple. If you truly believe in the long-term payment by cards and people getting away from cheques, this is a great company to own.

A great company and pretty much a staple in every portfolio managers holding. Visa Europe is very interesting and they are obviously taking in the rest of that. He has a series of shorts against this, such as Capital One, Discover and Allied Financial.

Visa (V-N) or Starbucks (SBUX-Q)? A hard choice, because they are both wonderful, wonderful companies. This one is very attractive here. Just acquired Visa Europe. 0.75% dividend yield.

Technicals are kind of sideways from where it has been. It seems it is bouncing off the 200 day moving average at about $76. You might have a “trading” Buy at this point. Long-term, owning this or MasterCard (MA-N) makes a lot of sense as there is a secular shift from writing cheques and paying cash. However, this looks like it is having trouble getting past the $82 level.

(Market Call Minute.) (Visa (V-N) or MasterCard (MA-N)?) He prefers Visa which has a much larger network, more retailers and more users. However, the business is under pressure with Walmart pushing back on fees. There might be some compromises which could impact earnings, but more and more people are switching from cash to credit card, and this company stands to benefit.

(Market Call Minute.) The valuation is very high and the payments network environment is going through a significant change right now.

What the merchants in the US and Canada pay Visa and MasterCard (MC-T) are vastly different than what they pay in Europe and Asia. We pay much higher fees which hurts the consumer. Longer-term these rates to have to come down, one way or another. He would be cautious right now until we see how this unfolds. Doesn’t thinks it is going to end well for the banks and Visa.

Just did a deal with Costco in the US to be their new credit card provider, displacing American Express. This company does more transactions than MasterCard, American Express and Discovery combined. Very much a growing company. Lost the Walmart Canada account, because of high fees. However, volume trumps everything. Acquired Visa Europe for about $20 billion, which is going to be quite accretive.

MasterCard (MA-N) or Visa (V-N)? Both are growing. She prefers MasterCard, although this one has a more dominant market share. To her it is trading a little rich. It also did an acquisition with Visa Europe. In theory that should add a little more growth, but thinks it has been overblown and MasterCard is a safer bet.

Chart shows a long upward trend channel and it should work higher. There is no sign this is going to go down. Feels the stock wants to go higher. However, if your portfolio is loaded with consumer sensitive stocks, then you have to lighten up. Consumers type stocks have gone too far and too fast. He would prefer to be underweight consumer stocks, and would lighten up.

Recently had a little uptick. Had added to his holdings during its February lows. Very strong operating margins. The whole Visa Europe acquisition has been probably one of the major things holding this back. In the very, very long-term, we are going to hear dialogue about not needing credit card companies, as we are all going to transact on our phones using text messages, etc. Thinks that is a long way off though.

Seasonally this tends to follow the same tendencies of the consumer discretionary sector, which tends to run from October all the way to the beginning of May. We are now past the period of seasonal strength. Technically it looks quite healthy. Resistance is at $81, and is not too far away. You want to see this break out or break down before taking a position.