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Trade-Ideas: Visa (V) Is Today's Momo Momentum Stock

Stocks in this article: V

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Visa ( V) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Visa as such a stock due to the following factors:

  • V has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $605.3 million.
  • V has a PE ratio of 52.3.
  • V is currently in the upper 30% of its 1-year range.
  • V is in the upper 25% of its 20-day range.
  • V is in the upper 35% of its 5-day range.
  • V is currently trading above yesterday's high.
  • V has experienced a gap between today's open and yesterday's close of 0.3%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on V:

Visa Inc., a payments technology company, engages in the operation of retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The stock currently has a dividend yield of 0.7%. V has a PE ratio of 52.3. Currently there are 21 analysts that rate Visa a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Visa has been 3.1 million shares per day over the past 30 days. Visa has a market cap of $98.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.53 and a short float of 2.2% with 3.64 days to cover. Shares are up 25.1% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Visa as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 14.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • V has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, V has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for VISA INC is rather high; currently it is at 66.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 42.93% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $1,644.00 million or 49.86% when compared to the same quarter last year. In addition, VISA INC has also vastly surpassed the industry average cash flow growth rate of -3.29%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 57.32% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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