In his The Ticker Tape Digest, technician Leo Fasciocco looks for stocks that have broken out of basing patterns; his latest breakout stock is credit card processing firm Visa (NYSE: V).
"Visa manages a group of global payment card brands. It licenses them to financial institutions that issue cards to their customers. The company maintains the largest card service in the world with annual revenue of $6.5 billion.
"The stock soared after it came public. It peaked at 90 and then was swept lower with the bear market. The stock has put in what seems to be a good bottom. The key is for it to kick in an up trend. That is quite possible now, but not a given.
"Of course, V is a lagging issue in that it has not gotten back to a 52-week high. So, it has a technical negative of 'overhead resistance.' That means people who bought at the higher price may want to sell and get even. That might inhibit the stock's ability to move.
"However, the stock's momentum indicator is now solidly bullish. And the stock has pushed out from a two-month flat base today clearing resistance at 58. We see potential for more on the upside.
"The company will report fiscal second quarter results on April 29. Analysts are looking for a 23% increase in net to 64 cents a share from 52 cents a year ago. The highest estimate on the Street is at 69 cents a share.
"We see good chances for an upside surprise. The past four quarters V has topped the consensus estimate by 12 to 2 cents a share. So, it could surprise big.
"This fiscal year ending Sept. 30, analysts predict a 20% increase in net to $2.70 a share from $2.25 a year ago. The stock sells with a price-earnings ratio of 21 which is reasonable. Going out to fiscal 2010, the Street projects an 18% gain in net to $3.18 a share.
"With the stock acting strong, wee see a chance for a move to 72 within the next few months, provided earnings meet expectations. A protective stop can be placed near 55."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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