Visa, Inc. (NYSE:V)

RallyCry (< 20) Submitted: 5/2/2011 11:18:08 PM : Start Price: $74.85 V Score: +121.24

I usually try to give a compelling valuation reason why a stock will move up. The technicals here are an even more impressive reason. The stock took a big hit on debit card fee legislation concerns in late 2010 and has based in the mid 70's. Lately V has shown signs of a uptrend in the high 70's. If it can clear $80.90, there is little resistance to the $85.68 area. Valuation-wise $5.51 per share in earnings for 2012 is consensus mean estimate. A PEG of .85 and a forward P/E of 14 is just too cheap for such a major cash flow generator at an average of 900 million in opearing cash flow over the last 4 quarters. Applying a modest foward P/E of 15 times 2012 projected earnings of $5.23 per share (5% below 2012 mean est.) values Visa at $78.45 plus cash per share of $5.45. Therefore, my 6-12 month price target is $83.90 or 5.6% above current market prices. If you want a blended approach, take my technical target of $85.68 and average it with my valuation target of $83.90 and you arrive at $84.79 or 6.6% above market price of $79.14. If the next two quarters of earnings are robust, I will have to revise my 2012 estimate and $90 is not out of the question before 2011 ends.