New Watch List Entries
None, no new watch list candidates
Active Watch List Candidates
V - Visa Inc.
Dropped Watch List Entries
CELG, DHR, and STZ have all graduated to our play list.
GT has been removed.
New Watch List Candidates:
No new watch list candidates tonight.
The stock market's big drop last week was ugly but it presents a buying opportunity. We had three watch list candidates (CELG, DHR, and STZ) all graduate to our active play list on Friday's market plunge.
Active Watch List Candidates:
The Goodyear Tire & Rubber Company - GT - close: 29.28
The market's big drop last week sent GT from multi-year highs back down toward its July lows.
The double-bottom near $29.00 in July could be support again. However, tonight I am cutting GT loose as a candidate. Shares underperformed last week, falling more than -10% in just three days. We can do without that kind of relative weakness.
Trade did not open.
08/23/15 removed from the watch list, suggested entry was a close above $33.00
Originally listed on the Watch List: 08/16/15
Visa Inc. - V - close: 71.19
Believe it or not but Visa held up reasonably well. Shares only lost about -4% for the week. We have a buy-the-dip trigger at $70.50 and odds are good that V will hit that trigger in the week ahead. More conservative investors may want to wait. We could get an even lower entry point near $68.00 if the market sell-off continues.
Trade Description: August 9, 2015:
The world is moving closer and closer to a cash-less society. Big payment processing companies like Visa and MasterCard will benefit from this transition.
According to the company, "Visa Inc. (NYSE:V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world's most advanced processing networks - VisaNet - that is capable of handling more than 56,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products."
It's important to note that V does not extend credit to consumers. There's no credit risk for bad loans here. V makes money on transactions. That business is booming.
On July 23rd V report its Q3 results, which were $0.74 per share. That beat estimates by 16 cents. Revenues were also higher than expected at $3.52 billion, up +11.5%. Management offered strong guidance and upped their EPS estimates into the mid teen percentage range. Long-term V is expected to grow earnings at almost 15%.
One of the big stories to come out of V's recent earnings report was news of a merger brewing. Visa is talking to former subsidiary Visa Europe. Estimates suggest the price target could be in the $15-20 billion range. Wall Street is positive on the deal and Visa expects it would add to earnings in fiscal 2017.
Another reason to be bullish on Visa is the fact that China recently opened its market to foreign companies to participate in clearing domestic bank card transactions. Previously only Chinese companies could do this. Now giants like V and MasterCard can compete in a market valued at more than $6.8 trillion. Considering V's expertise in this field we should expect them to grab a healthy chunk of the market.
Shares of V recently surged to new all-time highs and traded above $76 per share. After four up weeks in a row V posted a loss last week. Technically it produced a bearish engulfing candlestick reversal pattern on its weekly chart. If shares do correct lower we want to take advantage of the pullback. Broken support near $70.00 should be support. Tonight we are suggesting a buy-the-dip trigger at $70.50.
Buy-the-dip Trigger at $70.50, start with a stop at $66.25
BUY the 2017 Jan $80 call (V170120C80)
Option Format: symbol-year-month-day-call-strike
Originally listed on the Watch List: 08/09/15