Common Cents purchased shares of Visa at $69 after an approximate 10% pullback from its 52-week high. The pullback is likely related to an overall decline in the S&P in addition to concerns about economic slowdowns in China and other foreign markets.
While the concerns are partially valid, V has performed well with similar concerns thus far. China, while currently the hot topic of debate, is not a key market for V. Slowing of the Chinese economy could cause other dependent economies to slow, which could then hurt spending and, consequently, V's revenues. I'd like to wait and see evidence of that before I get too concerned, though.
V has several factors working in its favor. The declining price of oil (will it ever stop?) typically means consumers have more money to spend on non-fuel-related items-after they pay down some of their credit card debt, of course. And, as discussed in the previous V post, V will likely acquire its sister Visa Europe company in the near future. This will lead to cost synergies and an immediate increase in profit.
Going forward, Common Cents will look to trim this added portion of the V position when it hits new 52-week highs. Upon a further 7% - 10% decline in share price from $69, Common Cents will gladly add to this position.
No comments:
Post a Comment