Today the stock market got hit hard, well at least my holdings pulled back. I recently added some more shares to my existing holdings, so this move down just the day after my additions looks scary to me. All my stocks recently pyramided in my account were climbing to new highs so I want to believe we are looking at a correction rather than broader sell off amid weak economic data.
It is always funny reading all market analysis starting “Investors worried about weak recovery…” Well, the recovery is here already, no matter whether slow or steep. Nothing goes down forever and now we may expect a decent growth, so why panicking?
Every day I try to review the market overall and read about stocks I hold. I don’t know whether this is good or not, because sometimes it is frustrating watching your holdings lose $100 in a few hours in a small account like my one (not to mention those who lose ten or thousand times more in large accounts – I am still psychologically preparing myself for the moment when I put more money into this game).
However, today Wall Street over-reacts on news so I read what I can find about the stocks in my account to make sure I do not miss some news, mainly those catastrophic ones.
Today I found an article – analysis about Visa, which made me to think about this stock. I really liked what I read:
Juan Lagorio – Analysis
Thu Dec 3, 2009 5:23pm EST
NEW YORK (Reuters) – Visa Inc’s (V.N) shares, already on a roll this year, could ascend to fresh record highs in coming months, helped by an uptick in consumer spending and a surge in the use of debit cards.
The world’s largest payment network could easily beat earnings expectations, analysts said, suggesting that its growth potential and earnings momentum made it more comparable to a fast-growing tech stock than a troubled bank or insurer.
Read the rest of this article…
I was thinking about what I read and why I initially bought this stock back at the time after its IPO. I was comparing Visa to its peer MasterCard (MA). If MasterCard could march from a threshold of $50 per share in 2006 to its peak of $308.65 on May 27, 2008, why would not Visa follow the same path? Visa has more debit cards businesses than MasterCard and this recovery time is more about savings and paying in cash rather than borrowing money. Visa will benefit from this trend. It always beat analysts expectations and its earnings outperforms every quarter so far. This company is not exposed to delinquencies as are banks issuing plastics, and it will make money either on debits or credits. As the global economy recovers from the last recession, consumers start spending more money and they will use their plastics rather than cash.
If Visa is on its way up to $90 per share by the end of this year or early on 2010, we may see this stock even higher at the end of 2010. If the entire debit and credit network gets back to its all time highs and exceeds this record, MasterCard can hit or exceed its all time high and Visa may march up to hundreds per share and outperform MasterCard easily.
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