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Leading Finance Payment Stocks To Watch This Week
October 21 2019 - Visa, Mastercard Lead 5 Payment Stocks Near Buy Points In This Bullish Base By Investors Business Daily
Dow Jones stock Visa (V), rival Mastercard (MA) and FleetCor Technologies (FLT) are among five top stocks building bullish bases. So are fellow payment stocks Global Payments (GPN) and Fiserv (FISV).
Payment stocks have been big winners in the past few years. They haven't been among the breakouts in the most-recent upswing, but several held up reasonably well during choppy conditions in September. Visa stock, Mastercard stock, FleetCor stock, Global Payments stock and Fiserv stock are all within 10% of potential buys within flat bases. A flat base is especially bullish in weak markets, as the stock resists selling pressure.
Visa stock and FleetCor stock are on the IBD 50 list.
Shares in the credit card giant were down 1.3% to 175.71 on the stock market Friday. It is 6% below its 187.15 buy point after forming a six-week flat base, MarketSmith analysis shows. The Dow Jones stock fell below its 50-day moving average Friday after reclaiming that key level a week earlier.
In addition, the relative strength line has also been flat in recent weeks, and it is off its highs. This means the IBD 50 member has been performing in line with the broader S&P 500 index.
Visa has a strong IBD Composite Rating of 90 out of a possible 99. The Stock Checkup Tool shows earnings have been a key strength over the last three years. EPS has risen by 26% over this period. This is just above the minimum benchmark for CAN SLIM stocks. However Visa earnings growth has slowed for the past four quarters.
Visa was founded in the 1950s, but didn't come public until 2008. Since hitting a low in January 2009, Visa stock has risen roughly 1,700%.
One point to note is Visa earnings are due this coming week. Investor's Business Daily advocates using options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move when it announces earnings, while reducing the downside risk.
Shares are 7.9% below a 273.79 buy point. Like its archrival Visa, Mastercard stock fell below its 50-day moving average Friday. But it's been a strong performer this year, and has been on IBD Leaderboard for several weeks.
Mastercard stock has made solid gains since a late-January breakout, and remains stout. It is now up 44% for the year. The RS line has been improving since February 2017 though it has fallen somewhat from the all-time highs it reached in early September.
Mastercard stock has an IBD Composite Rating of 95, which puts it in the top 5% of stocks tracked. The Stock Checkup Tool shows it has an attractive mixture of both strong fundamentals and excellent technical performance.
Mastercard earnings growth has cooled for the past two quarters.
Earnings could benefit from Mastercard's increasing share in the "underpenetrated" European market. The firm is also seen as poised to lead in the B2B market, which Goldman Sachs says offers a $1 trillion opportunity for payment stocks.
A Wedbush analyst noted that the business of contactless cards also provides a growth opportunity. Moshe Katri says 40% of U.S. and 60% of international transactions are still made with cash and checks.
The payments stock is 4.2% below a 304.75 buy point. The current pattern is second stage, since FleetCor advanced 32% from the 230.34 buy point of a prior cup base. Leading stocks often make their biggest runs after breakouts from such early stage bases.
The relative strength line has been making strong strides throughout 2019.
FleetCor stock fell Friday but closed just above its 50-day moving average.
The IBD Stock Checkup Tool shows FleetCor has a 97 Composite Rating. This puts it in the top 3% of all companies tracked. That makes the Georgia-based company second in the 51-stock specialty financial services group, just behind TransUnion (TRU).
The Peachtree Corners, Ga.-based company, best known for its prepaid fuel cards for fleets, has been expanding into other payment services. For instance, FleetCor earlier this year bought Nvoicepay, a provider of automated accounts payable services. That boosted the company's merchant networks to more than 1 million supplier relationships.
SunTrust Robinson said last week in a client note it expects FleetCor earnings to continue to beat estimates. SunTrust reiterated a buy rating and raised its price target to 345 from 320.
Global Payments Stock
Shares are 9% below a 176.05 buy point. But, like Mastercard stock and Visa stock, it did close just below its 50-day moving average on Friday.
The RS line for Global Payments stock is showing signs of weakening after being in bullish mode for most of the year. It is now off its record highs
Global Payments stock currently has an IBD Composite Rating of 91, putting it in the top 9% of names tracked. Earnings are key to this high rating, with the three-year annual growth rate of 26%. This is above the 25% benchmark CAN SLIM connoisseurs look for.
But Global Payments earnings growth has slowed for the last four quarters from 37% to 17%.
Global Payments has seen its value sprint ahead as it continues to expand through organic growth and mergers. Its excellent performance throughout 2019 has seen the stock outperform the broader industry.
Global Payments looks poised for more growth after agreeing in May to buy Total System Services in a $21.5 billion all-stock deal. The deal is expected to help Global Payments, which provides payment processing services to merchants in North America, Europe and Asia-Pacific, extend its reach even further.
Piper Jaffray senior analyst Jason Deleeuw is bullish on the stock's prospects. He rates it as overweight with a 195 target, and believes its leadership in the small-to-medium business space is key to setting the company apart.
"It's one of our favorites. It's been one of our top ideas this year," he told Investor's Business Daily. "They were one of the early merchant processors to position themselves in the integrated point-of-sale channel. So they've been able to take a lot of market share."
Shares are 4% below a 110.02 buy point from a six-week flat base. Fiserv stock managed to find support at the 50-day line Friday, despite a broad sell-off.
Fiserv has a 95 Composite Rating and holds the No. 3 rank among its peers in the Financial Services-Specialty industry group. In addition its technical performance has been outstripping earnings growth. However investors should be cautious, as it is slated to report earnings on Oct. 29.
Fiserv provides financial services technology, including electronic bill payments and transaction processing, to banks and credit unions worldwide. Fiserv's payment processor unit First Data has a large presence in the merchant business and competes with firms including the aforementioned Global Payments.
Fiserv made an aggressive move at the start of the year by acquiring struggling payment processor First Data. The Brookfield, Wis.-based firm snapped up the New York firm for $22 billion in stock. The purchase price was lower than expected.
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