Visa Has Settled Into a Low-Risk Buy Zone -- Plus Jim Cramer's Take
After peaking near its 2015 highs in mid-April, Visa (V) - Get Report took a damaging hit. Back on April 22, the stock fell over 3% after opening the session with a huge earnings-inspired downside gap. Visa drifted a bit lower as the month came to an end, but further downside was limited.
This week, Visa continues to consolidate as it remains in a low-risk buy zone. Through the end of the month, Visa bulls should consider the stock a buy between $77.50 and $76.
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Visa has been repairing the April 22 breakdown damage for nearly four weeks now. During this process, the stock has traded in a very narrow range just above key support. Visa has been able to work off the overbought moving average convergence/divergence reading it reached three weeks after its powerful March 29 breakout. With shares back to neutral and support holding near the March peak, the stock has built a fairly solid base to begin a fresh rally leg.
In the near term, Visa bulls should keep a close eye on the May lows. A close back below $76 would clearly violate the bottom of the support zone. The stock would then be headed for a more drawn-out basing pattern as another layer of heavy supply would be left in place.
From a fundamental perspective, Visa is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio.
"We view shares as undervalued relative to its growth profile and expect upside to be driven by strength in the company's core business, larger-than-expected accretion from its acquisition of Visa Europe and accelerating adoption rates beginning in June, when Costco launches its Citi/Visa co-branded card," Cramer and Research Director Jack Mohr wrote recently.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
