Trade of the Day: Visa (V)

We continue to see a broad, volatile consolidation range in the S&P 500

We’ve opened a new bullish trade on Visa (V). Visa has been a long-term favorite of ours and, as you can see from its phenomenal uptrend, many others on Wall Street.

One of the primary reasons for this strong move higher has been Visa’s positioning during a key shift in the global economy: the shift from paper or cash transactions to electronic transactions. Consumers are using not only credit and debit cards to complete both in-store and online purchases, but they are also using smartphones. This is a trend that won’t be slowing down anytime soon, and we believe V is going to continue rising as revenues and earnings grow.

In late July, Visa jumped higher after beating revenue estimates by $160 million and earnings estimates by $0.15 per share — coming in at $3.52 billion and $0.74 per share, respectively. The company also announced that it is looking at buying Visa Europe, a move that would provide an easy opportunity for Visa to expand its reach and cut redundant expenses. We are often skeptical of the “synergies” many companies talk about when they acquire another company, but since Visa Europe is engaged in exactly the same business as V, we expect the synergies to manifest themselves in the same way they do when large pharmaceutical companies buy smaller ones. This isn’t like trying to combine AOL and Time Warner (TWX).

From a technical standpoint, we are excited to see that support at about $73 held on the same day Visa went ex-dividend. This shows that there is plenty of bullish interest in the stock. We expect the stock to climb back up to its recent high of $76.92, if not higher.

‘Buy to open’ the V September 75 Calls (V150918C00075000) for a maximum price of $1.50.

We also suggest you take your profits in the Micron (MU) puts we recommended last week, as the stock has been hit hard the past two days.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.

You can learn more about identifying price patterns – including bearish continuation patterns – and using them to project how far you think a stock is going to move in their Advanced Technical Analysis Program.


Article printed from InvestorPlace Media, https://investorplace.com/2015/08/trade-of-the-day-visa-v/.

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