|Bid||136.72 x 800|
|Ask||136.65 x 800|
|Day's Range||135.79 - 136.76|
|52 Week Range||104.43 - 140.00|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.16|
|Expense Ratio (net)||0.43%|
Cheaper valuation, better earnings growth prospects, solid performance in Stress Test, dividend hike announcements and less chances of a rate cut should position financial ETFs in a good spot in 2H.
Broader Market Gained after Fed Chair Hinted at Rate CutFed signaled rate cutThe broader US stock market rebounded sharply on June 4 after Fed Chair Jerome Powell indicated a possible rate cut in the near future. In his speech yesterday at the
A slight flattening of the yield curve may hurt bank stocks' profitability, but underwriting of several unicorn IPOs should help these financial ETFs.
Visa (NYSE:V), stock is up more than 30% over the past year, stoked, in part, by Federal Reserve rate hikes that have translated into higher profit margins for credit card companies. The overall fundamental strength of the company has also been the catalyst behind the V stock returns.The world's largest retail electronic payments network, Visa, is expected to report earnings on Apr. 24. There could be some volatility and profit-taking in V stock in April, especially as many other financial services firms also report in the coming weeks. However, I'd encourage long-term investors who would like exposure to the sector to regard any dip in the share price as an opportunity to add Visa stock to their portfolio. Long-Term V Stock StrengthsRobust Fundamental Numbers: Visa is a quality blue-chip company with a $345 billion market cap. The group does not issue credit cards or lend money. Instead, the company operates as an "intermediary," charging a fee on each of the 150 million transactions its network handles every day.InvestorPlace - Stock Market News, Stock Advice & Trading TipsVisa has three sources of revenue: * Service revenues (for services provided to card issuers for the use of Visa products); * Data processing revenues (fees Visa collects for the authorization, settlement, or clearing); and, * International transaction revenues (for cross-border and currency conversion transactions).Visa's revenue for the quarter ending Dec. 31, 2018 was $5.51 billion, a 13.25% increase year-over-year. The company saw double-digit growth in payments volume, cross-border volume and processed transactions for Q4 and full-year.As one of the major credit and debit card processors, Visa has strong pricing power and a good profit margin that stands at almost 55%. Visa's leadership position in the industry requires financial flexibility so that the management can continue the growth-centric steps. Its current ratio, which measures Visa's ability to pay off short-term liabilities with its current assets, is a healthy 1.65.Wall Street expects Visa's profitability and robust financial metrics to continue in the coming quarters, too -- a fact that should bring higher prices for V stock.Mobile Payments Space: Many of us have already paid for something with our smartphones at least once as mobile payments are fast becoming a convenient and swift method to pay bills or make transfers. Analysts expect the global market to reach $4.5 trillion by 2023.The most widely used transaction methods include contactless payments without entering the credit card PIN number at the point-of-sale or using a smartphone to pay a merchant or even a person such as a friend or family member, i.e., peer-to-peer (P2P) payments. * 7 High-Risk Stocks With Big Potential Rewards If you are looking at ways to benefit from this trend, Visa may be a solid company to consider. It's been boosting its mobile payment offerings. As early as 2011, the group took a stake in Square (NYSE:SQ), the San Francisco-based credit card processing fintech, which was founded in 2009. There are rumors that Visa may end up acquiring Square.Its other strategic investments include Stripe and Marqeta. It's currently bidding to buy Earthport, a British payments company.Over the past decade, smartphones have become a part of our daily lives and it would not be wrong to expect mobile payments to enter our daily lives in a big way. In other words, as more consumers tap to pay or download an app to transfer money, Visa investors are likely to reap the rewards. What Could Derail Visa Stock?Short-term Technical Analysis and Price Charts: Year-to-date, Visa is up 19%. So, in the next few weeks, there might be some profit taking in V stock. As a result of the recent impressive run-up in the stock price, short-term technical indicators have become somewhat over-extended. Investors who pay attention to short-term oscillators should note that Visa's technical message has also become "overbought."In April and May, Visa stock could trade sideways for several weeks, and even have a pullback toward the low-$140's or even mid-$130's level, where the stock is likely to find major support.Visa stock's beta is 0.99, which means its volatility on average mimics that of the broader market. Therefore if the industry or the broader market declines as the companies release earnings, V stock price may also be adversely affected.If you already own Visa shares, you might want to hold your position. That said, if you are worried about short-term profit taking, then within the parameters of your portfolio allocation and risk/return profile, you may consider placing a stop loss at about 3-5% below the current price point, to protect your profits to date.I would not advocate bottom-picking in case of near-term price weakness. Yet, I find Visa stock to be a compelling buy candidate and by the end of 2020, I'd expect the shares to reach $185.Competition in the Mobile Payment Payments Space: The fintech revolution is evolving and the entire payments industry is growing fast. In addition to Visa, several other U.S. companies are leading the mobile-payment race that requires cutting-edge technology. In October 2014, Apple (NASDAQ:AAPL) introduced Apple Pay which has now become one of the dominant digital payment apps in the U.S.In the P2P space, investors love PayPal (NASDAQ:PYPL) which owns the popular Venmo app. The app has over 25 million users and is ahead of its closest competitors -- Apple's Pay Cash, Square's Cash App, and Zelle, which is owned by Early Warning Services, a private fintech company. * 8 Risky Stocks to Watch as Earnings Season Kicks Off If there are other strong earnings reports or news from Visa's competitors hit the wires, there may be short-term volatility or decline in V stock price. However, Visa is a solid company with continued growth prospects in mobile payments. Therefore small price dips on daily headlines should not keep long-term investors up at night. Bottom Line on Visa StockVisa stock is a fundamentally sound stalwart investment with further growth prospects, leadership in the respective market, and proactive management -- factors that are likely to translate into a strong balance sheet and robust bottom line in the rest of the decade.Investors who are interested in financial services, but do not want to commit all their capital to a single stock such as Visa may also consider investing in various exchange-traded Funds (ETFs) that have Visa as a holding, including iShares U.S. Financial Services ETF (NYSEARCA:IYG), ISE Mobile Payments ETF (NYSEARCA:IPAY), or Vanguard Information Technology ETF (NYSEARCA:VGT).As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Medical Marijuana Stocks to Cure Your Portfolio * 8 Best Stocks to Buy for an April Rally * Top 20 Stocks to Buy for 20-Somethings! Compare Brokers The post Is Visa Stock Still a Long-Term Buy After 30%+ Run? appeared first on InvestorPlace.
The iShares Dow Jones US Financial Services (NYSEARCA:IYG) ETF has clocked an impressive 14.67% return for the year so far. This vehicle tracks the performance of a wide assortment of finance stocks like commercial banks, investment banks, asset manager and credit card firms.Of course, the overall bull move in the markets has been a major factor. After all, the 12-month return of the IYG is still -5.66%.Besides, there are still some headwinds for finance stocks. One is the drop in interest rates, which has pinched margins. But there is also the threat of slowing global economic growth.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet despite all this, there are certainly attractive consumer finance stocks -- especially those that have focused on next generation technologies like cloud computing and Artificial Intelligence (AI). And the winners will not be just be startups. Even traditional financial institutions should benefit. * 7 Top-Rated Stocks to Buy for March So then what are the best consumer finance stocks to invest in now? Let's take a look at three: Bank Of America (BAC)Source: Shutterstock When it comes to commercial banks, scale is critical. After all, the industry is highly commoditized. So achieving economies of scale can be a differentiator. Just look at Bank of America (NYSE:BAC). In the latest quarter, the consumer banking segment posted earnings growth of 52% to $3.3 billion. There was also a nice 6% increase in debit and credit card use.But this is only part of the story. Consider that BAC has been focused on digital transformation. For example, the company has 36.3 million active digital banking customers and 26.4 million use the mobile apps. While much of this has been due to typical online banking systems, BAC has been creating innovative technologies. There is Zelle, which is a peer-to-peer payments app. During the past year, transaction volumes soared by 97% to $14 billion. Then, there is Erica -- an AI digital assistant -- that has 4.8 million users.Granted, the digital efforts are still in the early stages. But so far, they are showing lots of traction -- and should help to lower costs and improve customer loyalty making BAC one of the top consumer finance stocks to buy today. Intuit (INTU)Source: Pictures of Money via Flickr (Modified) In the fintech world, Intuit (NASDAQ:INTU) has some of the most lucrative franchises: TurboTax and QuickBooks. Year after year they throw off substantial amounts of cash flows. But these businesses have also been a source of valuable data. Consider that QuickBooks has 4.5 million users and TurboTax has 36.4 million. And yes, INTU has been leveraging the data by developing new offerings. For example, there is QuickBooks Capital, which analyzes accounting information to underwrite loans. Since the launch a year ago, the service has funded $277 million in loans.INTU has also made progress on the AI front. To this end, it has built a digital assistant, called QB Assistant, that has answered more than 1.5 million questions. * 5 Tech Stocks Investors Should Buy on the Rebound Finally, INTU has seen lots of success with QuickBooks Employed, which makes it easier to track mileage and expenses. All in all, it is focused on the huge gig-economy opportunity, which involves fast-growing companies like Uber and Lyft. The app currently has 845,000 subscribers, up from about 489,000 a year ago. PayPal (PYPL)Source: Shutterstock Since taking the helm of PayPal (NASDAQ:PYPL) in 2015, Daniel Schulman has made some great strategic decisions. A big part of this has been M&A. But Schulman also has taken a more collaborative approach with financial institutions. Let's face it, consumers want choices -- not to be locked into proprietary solutions. The bottom line: The strategies have worked out quite well. PYPL continues to grow at a strong pace and generate significant cash flows. The company also has an enormous user base. Last year, the number of active accounts hit 267 million, up 17%. During this period, payment transactions jumped by 27% to 9.9 billion.But perhaps the most important driver is Venmo, which is the must-have payments app for Millennials. In the latest quarter, transaction volume soared by 80% to $19 billion (for the full year it was $62 billion). What's more, the monetization is still in the early phases. On an annualized basis, it looks like revenues will be about $200 million, compared to essentially zilch a year ago.Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 Retail Stocks Ready to Break Out * 7 Strong Buy Stocks the Street Loves * 10 Best Stocks to Buy and Hold Forever Compare Brokers The post 3 Consumer Finance Stocks to Buy for the Future of Fintech appeared first on InvestorPlace.
Earnings beat prospect in Q4 for banks may be bleak, but a steepening yield curve and cheaper valuation could boost bank ETFs in the near term.
At current market prices, Visa (V) trades at a premium valuation to most of its peers except Mastercard (MA) and PayPal (PYPL). The trailing-12-month (or TTM) PE ratio for Visa is 29.2x, which is lower than Mastercard’s and PayPal’s multiples of 34.7x and 36.4x, respectively. However, Visa’s PE ratio is much higher than its other peer, Global Payments (GPN), which trades at a multiple of 23.8x.
Payment modes are shifting rapidly from cash to digital due to continuously evolving digital technology, increasing online transactions, and competitive forces. With its sustained focus on technological innovations, Visa (V) is well-positioned to continue leading this digital transformation. Visa has invested billions of dollars in its technology transformation initiatives in the last several years.
Mastercard (MA) has made a remarkable run over the last one-and-a-half years. The stock traded at ~$103.00 at the beginning of 2017, and it currently trades at ~$211.00—almost double its stock price in that timeframe. The stock is currently trading near its 52-week high of $217.35, which it attained on September 4.
Payments are shifting rapidly from cash to digital mainly due to continuously evolving digital technology, increasing online transactions, and competitive forces. Visa (V) with its sustained focus on technological innovations is well-positioned to continue leading this digital transformation. Over the years, the leading payment processor company has invested billions of dollars in its technology transformation initiatives.
Visa stock (V) has sparkled over the last one and half years. Year-to-date, Visa stock has returned ~25%, much better than the iShares U.S. Financial Services ETF (IYG) and the SPDR S&P 500 ETF (SPY), which are up 5.6% and 8.3%, respectively. Visa’s revenues and earnings per share (or EPS) have topped the Wall Street estimates in the last eight quarters and seen a significant YoY improvement.
JPMorgan Chase (JPM) has settled a class-action lawsuit filed by a group of black financial advisers who alleged racial discrimination. Bloomberg, the financial data and news provider agency, revealed yesterday that six of the bank’s current and former employees had filed the lawsuit. The court documents alleged that the nation’s largest bank is indulged in “systemic, intentional race discrimination” since it assigns lucrative assignments to white advisers while assigning less profitable branches to black advisers.
The price-to-book value (or PB) ratio is considered to be the ideal multiple to value companies that have a significant amount of liquid/tangible assets on their books such as finance, banking, insurance investment, and manufacturing companies. The ratio compares a company’s current market price to its book value.