By: Scott Redler
Visa (V) and MasterCard (MA) both look ready for a great trade. Visa reported outstanding earnings and has consolidated nicely since then. Both of these stocks have a great fundamental story developing, as everyone now uses plastic instead of cash. That trend is quickly advancing to China (can anyone believe that China’s savings rate is 38% and ours is 3-4% wow! anyway, back to the point). Not only do both of these companies benefit from the move to plastic, but also, neither of them assumes the credit risk of their card users.
I am looking for Visa to trade through $88-89 on heavy volume. This will clear the way for a new leg over $100.
With MasterCard, the earnings/fundamentals were not quite as good. They had a weak quarter and a nasty gap down. Since then though, it’s been creating a new pattern. The stock looks setup for a trade back into that gap–the trigger is at $234-235–for a nice move back to the $245 area.
