Sector: Industrial Goods
Industry: General Contractor
52-week Price: $4.75 – $27.25

June 6, 2008 Business Wire:

“China Architectural Engineering, Inc. (CAE) (AMEX:RCH), a leader in the design, engineering, fabrication and installation of high-end building envelope systems, today announced that the Company will ring the opening bell at the NASDAQ MarketSite in New York City’s Times Square on Thursday, June 12, 2008 at 9:30 a.m. EDT. The Company will commence trading on the NASDAQ Global Select Market under the ticker symbol “CAEI” on June 10, 2008.”

Although the company has “China” in its name, 45% of its revenue comes from Australia, Dubai, Qatar, the U.S. and Europe. Business week noted that growth should last well beyond the Olympic games this year because of robust orders in foreign markets.

The company’s order backlog is said to be at $100 million or 1/5th of its current market cap, a nice card to have up its sleeve in today’s world market.

The gap-up on the chart in May on huge volume concerns me when attempting to establish a solid risk/ reward trade strategy. I would like to see the gap fill prior to entering a position but I do see support along the 50-d m.a. or even $8 per share. I am going to set-up the “ideal trade” using the current moving average so we can cover a potential pull-back to the gap-up area noted on the charts.

Potential Trade Set-up:
Entry: $7.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 12% or $6.16 ($6.00 area)
Number of Shares: 1,190
Position Size is $8,334
Risk is $0.84
Target is $13 for a 7-to-1 risk/reward ratio

Key Fundamental Numbers:
Market Cap.: $547M
Outstanding Shares: 51.1M
EPS Growth (MRQ): 178%
EPS Growth (TTM): 135%
Revenue Growth (MRQ): 76%
Revenue Growth (TTM): 50%

Earnings per Share (EPS):
$0.50 Next year, +39%; High estimate $0.64, +77%
$0.36 current year, +71%
$0.21 last year, +50%
$0.14 previous year

Sector: Services
Industry: Advertising
52-week Price: $5.27 – $23.00

The stock is starting to pull back to the 50-day moving average which will offer us a solid entry opportunity with an excellent risk-to-reward ratio. If my swing target method can offer any accuracy whatsoever, we could be looking at a 10-to-1 risk-to-reward trade. A buy in the $16 to $17 area could also provide us a 5-to-1 risk-to-reward ratio assuming it can get back to $23 without violating the stop.

Not bad if you ask me. I will be taking on the trade if it drops below $17 and holds support at the 50-d moving average. Maybe it will work, maybe it will flop. As I say every time (like a broken record): take the trade and follow the rules. That’s all we can ask!

Take a look at some previous posts I have made with VISN highlighted:

Hot Momentum Stocks

A couple more HOT momentum stocks:
VISN – 22.53, VisionChina Media Inc. has also been tearing up my nightly screens but it slipped past any and all ideal entry points for me as a trend trader. It is now in the hands of the day traders with a year-to-date gain of 146%, a 148% gain over the past three months and a 42% gain over the past month.

Top Rated Stocks

Other High Rated Stocks in my System:
VISN – 18.88, VisionChina Media, Inc.

Potential Trade Set-up:
Entry: $16.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $14.72
Number of Shares: 781
Position Size is $12,500
Risk is $1.28
Target is $30 for a 10-to-1 risk/reward ratio.
A move back to $23 with a buy at $16 would be a 5-to-1 risk/reward trade.

Institutional Analysis:
Held By Institutions: 43.21%
Total Held by Institutions: 48
Money Market: 29
Mutual Fund: 17
Other: 2

New Positions: 27
Positions Sold: 8
Shares Held: 36.97M
Shares Held Previous Period: 32.43M

Shares Bought: 6.82M
Shares Sold: 2.32M
Value of Shares Bought: $133.2M
Value of Shares Sold: $45.19M

Top Institutional holders; Shares Held:
Oz Management, L.L.C.; 13,219,708
Goldman Sachs Group Inc; 5,366,726
Columbia Wanger Asset Management, L.P.; 5,242,328
Columbia Acorn Select Fd; 2,850,028
Columbia Acorn Fd; 1,250,000

Key Fundamental Numbers:
Market Cap.: 1.29B
Outstanding Shares: 68.4M
Float: 37.6M
P/E (trailing): 78.83
P/E (forward): 21.66
ROE: N/A
ROA: N/A
PEG Ratio: N/A
EPS Growth (TTM): 143%
EPS Growth (MRQ): 285%
Revenue Growth (TTM): 471%
Revenue Growth (MRQ): 304%

Net Income (thousands):
FY 2007: $9,393
FY 2006: $(4,069)
FY 2005: $(416)

Revenue (thousands):
FY 2007: $29,386
FY 2006: $3,873
FY 2005: $291

Earnings:
FY 2009: $0.87E
FY 2008: $0.58E
FY 2007: $0.17

Company Overview:
VisionChina Media, Inc., through its consolidated affiliated entity, China Digital Mobile Television Co., Ltd., provides advertising services in the People’s Republic of China. It operates out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems. The company’s mobile digital television advertising network delivers real-time content provided by the local television stations.

SOL – 27.80, ReneSola Ltd. was up 6.76% Monday on volume 325% larger than the average. I told you last week that this was one momentum stock you should not ignore. It’s now up almost 30% in three days after my Thursday morning post. It was up 15% last Wednesday, one day prior to me highlighting the stock which is why I will repeat that stocks in motion typically stay in motion (simple physics – right).
5/14/08:

Renesola Ltd (SOL), $21.67, is on fire over the past several weeks since its IPO debut in January. Volume has been exploding as the stock is up almost 200% since it’s low in late March. I have been watching the stock as it has crossed dozens of nightly screens but decided not to post it to the blog until now.

If you want momentum, SOL is currently providing it. The stock was up more than 15% today on volume 409% larger than the average. At least 11 accumulations days have occurred over the past month as the stock started to log new all-time highs.

A couple more HOT momentum stocks:
VISN – 22.53, VisionChina Media Inc. has also been tearing up my nightly screens but it slipped past any and all ideal entry points for me as a trend trader. It is now in the hands of the day traders with a year-to-date gain of 146%, a 148% gain over the past three months and a 42% gain over the past month.

CSUN – 13.06, China Sunergy Co. is now up more than 47.74% over the past month but is still down 20% from my original 2008 post of $16.15 on January 4, 2008 (however, I did state: Ideal Entry: $12.00). The three month gain is 80.93% with a peak of 97% – I timed this one wrong but saw the trending potential back at the turn of the year. Patience – a must in this business. CSUN did reverse Monday – the first red flag in May.
1/4/08:

China Sunergy (CSUN) is part of a booming solar industry that includes stocks such as the ones listed below; all head lined by FSLR, a stock that is up more than 700% over the past year or so.

FSLR – $265.87
STP – $88.22
SOLF – $36.95
YGE – $38.02 (another stock I am looking to add)

One last word: watch the daily action because the summer months are coming – sell off time (hint, hint). Have all stops set and always look for red flags! Enjoy the momentum while it lasts but NEVER let a solid gain slip away.

If you want momentum, SOL is currently providing it. The stock was up more than 15% today on volume 409% larger than the average. At least 11 accumulations days have occurred over the past month as the stock started to log new all-time highs.

The stock is the latest in my pursuit of profits in Chinese, Solar and IPO combinations over the past 12-15 months. JASO was the original poster-child but SOL is now catching my attention. I don’t own shares as of this writing but that could change on the proper entry opportunity (I don’t have one at this time but I will update if and when it happens).

ReneSola, Ltd., through its subsidiaries, engages in the manufacture and sale of solar wafers and related products in the People’s Republic of China. It offers feedstock, ingots, and wafers for the solar industry. The company sells solar wafers to Chinese and international PV cell manufacturers.

Sector: Services
Industry: Business Services
52-week Price: $16.17 – $39.06

TeleTech Holdings, Inc., together with its subsidiaries, provides onshore, offshore, and work-from-home business process outsourcing services. Its services include the transfer of its clients’ front and back office business processes to its delivery centers or work-from-home associates.

The stock is an interesting play that could provide rewards based on increasing earnings, revenues and a 10-week/ 30-week positive crossover. The stock was flagged in a technical screen I ran this week looking for strong candidates that made the positive 10/30-week crossover.

The recent slump in the economy may hurt the immediate potential of the company as revenues could stall or even drop but that shouldn’t last for long (or so I think).

Anyway, this stock is a pure trend play based on technical analysis, a possible rebound that I will test with an entry in the $22 area. It’s not my ideal IPO momentum trade or a stock making a new high but this type of position works for me in this market environment.

$10,000 invested five years ago would be $57,398 today

Potential Trade Set-up:
Ideal Entry: $22.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $19.80
Number of Shares:455
Position Size is $10,000
Risk is $2.20
Target is $40
Reward/ Risk: Possible 8-to-1 (long term)

Institutional Analysis:
Held By Institutions: 59%
Total Held by Institutions: 453
Money Market: 150
Mutual Fund: 291
Other: 12

New Positions: 101
Positions Sold: 96
Shares Held: 63.8M
Shares Held Previous Period: 59.0M

Shares Bought: $22.2M
Shares Sold: $17.4M
Value of Shares Bought: $ 530.6M
Value of Shares Sold: $414.9M

Top Institutional holders; Shares Held:
Alydar Partners, LLC; 3,755,000
Alger (Fred) Management Inc.; 3,466,082
Rainier Investment Management; 2,653,500
Trivium Capital Management, LLC; 2,402,000
Wells Fargo & Company; 2,092,771

Key Fundamental Numbers:
Market Cap.: $1.67B
Outstanding Shares: 70.1M
Float: 42.3M
P/E: 27.45
ROE: 16.08%
ROA: 9.96%
PEG Ratio: 1.00
EPS Growth (TTM): 52.20%
EPS Growth (MRQ): (28.19%)
Revenue Growth (TTM): 13.38%
Revenue Growth (MRQ): 14.79%

Net Income (Million):
FY 2006: 51.8
FY 2006: 28.2
FY 2004: 24.0
FY 2003: (41.2)
FY 2002: (5.21)

Revenue (Million):
FY 2006: 1,211
FY 2006: 1,087
FY 2004: 1,053
FY 2003: 992.3
FY 2002: 1,017

Earnings:
FY 2009: $1.73E
FY 2008: $1.45E
FY 2007: $1.06E
FY 2006: $0.73
FY 2006: $0.38
FY 2004: $0.32
FY 2003: ($0.56)
FY 2002: ($0.07)

1-yr Sales Growth: 11.5%
1-Yr Net Income Growth: 84%

If you don’t know by now, POT is up 552% over the past two years, 230% over the past 12 months and 43% year to date; all while the S&P 500 is down 2.25% year-to-date, an amazing accomplishment in this market environment (see chart below).

Intrepid Potash Inc, a producer of crop nutrients, raised $960 million with an initial public offering that priced shares above expectations in the $27 to $29 range. The IPO price came in at $32, $3 above the top of the range expected by underwriters. The original estimate was for 24 million shares to be priced between $24 and $26 per share (30 million shares were offered at $32).

Intrepid Mining, the parent company of Intrepid Potash claims to be the largest potash producer in the U.S. I missed the HUGE up-trend in POT but IPI may give this industry one last run before the trend is over. Markets are not efficient so the greed of crowds may take this IPO higher due to the recent performance of POT. Risks will be associated as a quick sell-off could be a huge possibility if things don’t go the way investors expect.

As you can see from the charts, IPI priced at $32 per share but jumped as much as 50% during the trading debut. The stock reached a high of $53.50 today but closed down 2.6% at $49.09.

Tate from Self Investors notes:

“As far as the fundamentals, they look solid but nothing extraordinary. My take on this is that this IPO comes at a time when the agriculture stocks appear to be near a major top with perhaps one more last climax run left in them. Does this IPO signal the top? Just maybe. Like all IPO’s I’ll let it trade for at least two weeks and only enter on a breakout from a bullish pattern.”

I tend to agree with his analysis for the most part. I will not hesitate to jump on a trend if IPI starts to run higher because crowds are persistent and I don’t like to fight them.

Sector: Retail
Industry: Retail/ Wholesale Building Products
52-week Price: $9.18 – $24.09

February 25, 2008: TITN – $19.70

Three stocks are catching my eye while making multiple screens over the past couple of weeks. MTL is up over 13% in less than two weeks since I highlighted it in a post titled Basic Materials (Oil) Stocks Making New Highs

Trading momentum is paying-off in the current market environment. Swing trading breakouts making new highs on volume at least 100% larger than the average is king. It’s working so pay attention and be smart while putting on trades. MTL is no longer a buy since it has become extended but TITN and RIO may be setting up for new 52-week highs.

April 14, 2008: TITN – $22.39

TITN – 22.39, solid young stock with an ideal entry point near $20 (looking good)

Fourth quarter earnings are scheduled for Monday, April 28, 2008. I would not be a buyer until after earnings are released (this event will shape my view on the stock and a potential position). Last quarter’s net income rose to $2.7 million, or 36 cents a share, from $0.8 million, or 13 cents a share, a year ago (sales increased 67% to $132 million).

My ideal accumulation area is between $19 and $22 with the best entry coming along the 50-day moving average, which seems to be providing support. The weekly chart is showing clear accumulation by institutional investors as most up-weeks are happening on larger volume while down-weeks are happening on lighter volume.

I will definitely be interested in a position since this stock has been making my nightly screens and scans since February. I have learned that the best stocks are the ones that continually make these scans (that is fact since I started investing with this method in 2001).

Potential Trade Set-up:
Entry: $21.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $18.90
Number of Shares: 476
Position Size is $10,000
Risk is $2.10
Target is unknown (too little information)

Institutional Analysis:
Held By Institutions: 42.75%
Total Held by Institutions: 62
Money Market: 43
Mutual Fund: 18
Other: 1

New Positions: 60
Positions Sold: 0
Shares Held: 7.43M
Shares Held Previous Period: 0.13M

Shares Bought: 7.3M
Shares Sold: 0
Value of Shares Bought: $134.1M
Value of Shares Sold: $0

Top Institutional holders; Shares Held:
Systematic Financial Management, L.P.; 711,600
Trafelet Capital Management L.P.; 528,500
Heartland Value Fund; 350,000
Heartland Advisors Inc.; 350,000
Wasatch Advisors Inc.; 325,000

Key Fundamental Numbers:
Market Cap.: $320.3M
Outstanding Shares: 13.4M
Float: 6.0M
P/E (TTM): 46.02x
PEG Ratio: 2.09x
EPS Growth (MRQ): 229.23%
Revenue Growth (MRQ): 66.99%
3-Yr Earnings Rate: 54%
3-Yr Sales Rate: 34%

Net Income (thousands):
FY 2007: 3,720
FY 2006: 2,746
FY 2005: 1,270
FY 2004: 164
FY 2003: 416

Revenue (thousands):
FY 2007: 292,987
FY 2006: 193,758
FY 2005: 135,781
FY 2004: 79,269
FY 2003: 54,189

Earnings:
FY 2009: $0.77
FY 2008: $0.90

Company Summary:
Titan Machinery Inc. owns and operates a network of agricultural and construction equipment stores in North America. It is a retail dealer of Case IH Agriculture equipment and a retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the United States. The Company sells and rents agricultural and construction equipment, sells parts, and services the equipment operating in the areas surrounding its stores. The agricultural equipment it sells and services includes machinery and attachments for uses ranging from large-scale farming to home and garden use. The construction equipment it sells and services includes heavy construction and light industrial machinery for commercial and residential construction, road and highway construction and mining applications. In January 2008, the Company acquired Avoca Implement and Greenfield Implement, two CaseIH farm equipment dealerships in Southwest Iowa.

I will also be looking into stocks such as BRK/A, SHLD, BAM and some of the recent banking stocks that may be undervalued (now and in the near future).

Value Stock of the Month
Leucadia National Corp. (LUK)
Wednesday’s Closing Price: LUK – $54.10

Sector: Financials
Industry: Multi-Sector Holdings
52-week Price: $30.01 – $54.10

Leucadia is a diversified holding company that has subsidiaries engaged in manufacturing, real estate, medical product development, gaming entertainment, mining, and energy. Does this remind you of Berkshire? Leucadia is known, by some, as a “mini Berkshire Hathaway” with an average annual return of over 22%.

By the way, BRK/A is currently trading along the 200-d m.a. for the first time since last summer ($110k per share). It closed today at $129,475 after reaching a 52-week high of $151,600 in December (a 14% slide). Chart at bottom of blog post.

Leucadia executives Ian Cumming and Joseph Steinberg each own about 13% of Leucadia’s shares and practice a methodology similar to that of Warren Buffett. A $10,000 investment 5 years ago in LUK is worth $43,029 today.

Leucadia has a strong record of stock market performance due to its strategy of finding assets and companies that are out of favor or troubled and are therefore selling at a discount to their inherent value.

The stock just made a new 52-week high after using the 200-d m.a. as support while giving us a 10-week/30-week moving average crossover to the upside. My ideal accumulation area is near (slightly above or slightly below) the 200-day moving average (currently near $46). In hindsight, late 2006 and early 2007 was the “true’ ideal time to buy before the latest run. However, I should have listened to my old friend Kevin Pickell and grabbed shares years ago.

I was completely off on my timing of SHLD back in May 2007 so I may not be that bright when it comes to value companies but it’s time to start a new portfolio for my family that isn’t so young/fast time growth oriented (especially when people are running scared). SHLD will be my next value stock to research as it looks to be entering an area where accumulation is appealing.

Potential Trade Set-up:
Ideal Entry: $45 (low $40 range is better)
Risk is set at 3.0% of total portfolio or $3,000 of $100k
Stop Loss is 25% or $33.75
Number of Shares: 267
Position Size is $12,000
Risk is $11.25
Target is not material (value play)

*Notice the unusually large stop loss and risk versus trading a growth stock.*

Institutional Analysis:
Total Held by Institutions: 691
Money Market: 328
Mutual Fund: 349
Other: 14

New Positions: 142
Positions Sold: 55
Shares Held: 180M
Shares Held Previous Period: 174.9M

Shares Bought: 16.2M
Shares Sold: 10.2M
Value of Shares Bought: $729.4M
Value of Shares Sold: $462.5M

Top Institutional holders; Shares Held:
Horizon Asset Management, Inc.; 22,086,165
Kinetics Asset Management Inc.; 12,212,376
Fairholme Capital Management; 8,832,992
Beck, Mack & Oliver; 7,700,775
First Manhattan Company; 7,391,364

Key Fundamental Numbers:
Market Cap.: 11.4B
Shares Outstanding: 222.6M
Total Revenue: $1.2B
Profit Margin: 43.53%
52Wk Change: 66.30%
Earnings Growth (5yr): 17.87%
Rev. Growth (TTM): 33.87%
PE (TTM): 25.34x
ROA: 7.49%
ROE: 10.16%

1-yr EPS Rate: 259%
1-yr Sales Rate: 60%

EPS Growth (MRQ): 141.96%
Revenue Growth (MRQ): 72.49%

Net Income (millions):
FY 2007: 484
FY 2006: 189
FY 2005: 1,636
FY 2004: 146
FY 2003: 97

Revenue (millions):
FY 2007: 1,155
FY 2006: 862.7
FY 2005: 1,041
FY 2004: 2,262
FY 2003: 556.4

Earnings:
FY 2007: $2.09
FY 2006: $0.60
FY 2005: $5.35
FY 2004: $0.70
FY 2003: $0.46

SD – 44.28, made almost every screen I ran this week (buy near $40)

Stock of the Day
Sandridge Energy Inc. (SD)
Monday’s Closing Price: YGE – $44.38

Sector: Oil & Gas
Industry: Oil and Gas Production
52-week Price: $28.50 – $45.40

SandRidge is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The Company also owns and operates drilling rigs and a related oil field services company with focus on exploration and exploitation of its significant holdings in West Texas. SandRidge operates in four segments: exploration and production, drilling and oil field services, midstream gas services and other.

The stock recently logged a new all-time high on increasing volume as it broke-out above the ideal entry area of $41.15. Unfortunately for me, it broke out during the week of my vacation (and return). I can’t say that I would have bought shares but I am interested now. I understand that crude is selling at all-time highs and some people are calling for a top but I am not about to listen to them. Money is still to be made in this industry. By the way, SandRidge is in the #1 rated industry group as produced by Investor’s Business Daily.

Net income was 137% higher than a year ago (3rd quarter) with revenue increasing by 71% during the same time period. Natural gas and crude-oil production jumped nearly five-fold. Shares closed at $31.20 ahead of the 3rd quarter report; it has since given investors a 40%+ gain in a few months.

SD is starting to outperform a few of the top stocks in the top rated industry group, something I do make note of. For example, SD is up 24% YTD as the industry groups as a whole is up 18% YTD. As you will notice, SD shares company with some very respectable names (stocks).

Sister Stocks (Top Rated Industry by IBD):
Range Resources Corp – RRC
Continental Res Inc. – CLR
Quicksilver Resources – KWK
Bois D’Arc Energy LLC – BDE
Petrohawk Energy Corp – HK

Potential Trade Set-up:
Ideal Entry: $41.15
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $37.04 (breathing room to $36 is okay)
Number of Shares: 243
Position Size is $10,000
Risk is $4.12
Target is $55+ (based on future growth)
Reward-to-Risk is 3.36-to-1 with ideal entry; less with current price

Continue reading to see the impressive institutional numbers, general fundamental numbers and basic technical analysis that make this stock stand above other recent IPO’s. Net income, revenue, earnings and industry (global) growth make this an ideal stock for my watchlist. I am looking for young companies with increasing earnings and sales.

Institutional Analysis:
Held By Institutions: 38.07%
Total Held by Institutions: 269
Money Market: 123
Mutual Fund: 143
Other: 3

New Positions: 229
Positions Sold: 8
Shares Held: 64.4M
Shares Held Previous Period: 5.8M

Shares Bought: 59.4M
Shares Sold: 0.77M
Value of Shares Bought: $2.3B
Value of Shares Sold: $29.9M

Top Institutional holders; Shares Held:
Ares Management LLC; 13,333,333
Lone Pine Capital, LLC; 6,557,039
Farallon Capital Management LLC; 5,771,010
Janus Capital Management, LLC; 3,545,082
Janus Contrarian Fund; 2,424,071

Key Fundamental Numbers:
Market Cap.: 6.3B
Outstanding Shares: 142.7M
Float: 102.8M
P/E (TTM): N/A
PEG Ratio: N/A
Total Debt/Total Capital: 32.50%
Quick Ratio: 0.96x
Operating Profit Margin: 27.58%
Gross Profit Margin: 76.01%
Net Profit Margin: 7.37%

1-yr EPS Rate: 118%
1-yr Sales Rate: 72%
5-yr EPS Rate: 91%
5-yr Sales Rate: 63%

EPS Growth (MRQ): 141.96%
Revenue Growth (MRQ): 72.49%

Net Income (millions):
FY 2007: 50
FY 2006: 16
FY 2005: 18
FY 2004: 25
FY 2003: 13

Revenue (millions):
FY 2007: 659
FY 2006: 363
FY 2005: 277
FY 2004: 172
FY 2003: 155

Earnings:
FY 2009: $0.64E
FY 2008: $0.44E
FY 2007: ($0.06) – Estimates were for $0.03

In total, the IPO could raise nearly $17 billion, surpassing the record held by the AT&T Wireless IPO from 2000 which raised $10.6 billion. The $15 to $17 billion projection is approximately 70% higher than what the market was reporting when I was anticipating this IPO last November.

“VISA, the largest U.S. credit card network said it is looking to raise $1o billion in an initial public offering, according to a registration statement with the SEC.”

JPMorgan (JPM) is one of the lead underwriters (Goldman Sachs is the other) so the market wants this IPO to launch successfully so additional fears don’t rise following the $2 Bear Stearns fire sale. A successful IPO would generate a large cash influx to banks such as JPMorgan, Bank of America and Citigroup. Visa’s IPO could generate around $500 million in fees for underwriters, according to documents with the SEC.

Shares will price after the close Tuesday with lots ready to move Wednesday morning.

As pointed out in my last post, Visa and Mastercard (MA) are not directly exposed to rising defaults and late-paying consumers because they process transactions and these transactions typically rise when credit is tight from banks. American Express and Discover are not as fortunate in this sense as they extend the credit to their card holders, exposing themselves to the defaults.

As you can see, Mastercard (MA) has held up very well during this credit crisis. It has not violated it’s major moving averages and is still in an overall long term up-trend.

November 15, 2007: Anticipating the VISA IPO

Why do I like VISA’s potential?

• $1o Billion would represent the second largest IPO ever!
• Revenues are expected to grow steadily as consumers continue to use their cards
• VISA processed 44 billion transactions totaling $3.2 trillion in 2006 (Mastercard processed 23.4 billion transactions totaling $1.9 trillion)
• VISA has made $771 million on $3.7 billion in revenue during the first nine months of 2007
• VISA makes their money from the fees it charges to card users and merchants using its network
• Mastercard is half the size of VISA and is up 5-fold from its IPO

BEST OF ALL:

• Because it acts as an intermediary, Visa doesn’t sustain losses when consumers don’t repay the debts run up on credit cards bearing its brand. Those liabilities instead fall to the banks that issue the cards and set the terms of repayment
• Most of Visa’s major stockholders are banks. They include: J.P. Morgan Chase & Co., which owns 23.3 percent of the company’s Class B Stock; Bank of America Corp., 11.5 percent; National City Corp., 8 percent; Citigroup Inc., 5.5 percent; U.S. Bancorp, 5.1 percent; and Wells Fargo & Co., 5.1 percent.

NO RISK for VISA; the banks are responsible for the cardholders that don’t pay their bills. What could be better than that? Tell me!