(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of V.)
Visa Inc. (V) shares are nearing a technical breakout, which could send shares of the payment processors nearly 10% higher to roughly $132 per share. Visa's stock has performed exceptionally well in a challenging stock market in 2018, rising by over 6%, versus an S&P 500 that has fallen by nearly 1%. Shares of Visa are about 4.5% off its 2018 highs, while the S&P 500 is almost 7.5% off its highs.
Shares of Visa have been trending higher since November of 2016, which has resulted in the stock rising by over 48% to its current price near $121. The technical uptrend will play a crucial role going forward for the stock, as it has offered strong support over time. The channel can also be used to help project where the stock goes from current prices. (For related reading, see also: Visa Stock Has Room to Rise Further.)
The technical chart below shows that Visa has been rising in a trading channel, with both an upper and lower bound. The upper bound has acted as a level of resistance in the past, while the lower bound has acted as a stable level of technical support over time. There is also a downtrend present, starting in January of 2018. Should Visa's stock price rise above $124 it would signal a breakout, and likely send the stock on its way towards $132, and the upper part of the trading channel.
The options market is also bullish on shares of Visa, and see shares rising by expiration on June 15. The long straddle options strategy is pricing in a rise or fall of 8.25% from the $120 strike price, placing the stock in a trading range of $110 to $129.90. But the open call options outweigh the number of open put contracts by a ratio of over 10 to 1, with 28,500 open call options. It suggests that traders are betting more heavily that shares of Visa will rise by June. (For more, see also: Visa: Coinbase Was Not Responsible for Overcharging Customers.)
Analysts are also bullish on shares of Visa, looking for shares to rise to nearly $141—almost 16.6%. But it is also worth noting that of 36 analysts that cover the stock, nearly 92% have a "buy" or "outperform" rating, while only 8% have a "hold" rating, according to Ycharts. But with all the bullish sentiment it gives the company a tiny margin of error when it reports the next round of quarterly results on April 25.
For now, the charts and the bulls are lining up to bet that shares of Visa continue to rise. But it will be the next round of quarterly results that will likely determine if that happens or not.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.