The turmoil in the markets makes it too easy to justify
selling any stock these days. Yet while
panic never helpsinvestors, it's still a good idea to
play devil's advocate with investments.
Consider credit and debit enabler
Visa (NYSE: V). Though the
plastic-transaction market is showing some positive signs
lately, you'll find more than a few of the 4,392
Motley Fool CAPSmembers who have weighed in on the
company offering reasons to be bearish.
At The Motley Fool, we like to consider both the good and
bad sides of an investment. Here, I've highlighted three of
the main bearish arguments on Visa. Be sure to
read the bullish side as well, and then weigh in with
your own comments below or rate Visa
in
CAPS.
1. Wallets still tight
Still coping with the economic fallout,
consumers
aren't freely spendingjust yet. Overall retail sales are
still facing pressure as stores such as
Sears Holdings (Nasdaq: SHLD)
struggle with performance. Holding detailed transaction
data, Visa sees it all happening in real time and recently
forecast that consumer spending will continue to remain tight
for at least the rest of 2009.
2. Fees under pressure
Interchange fees have been under pressure from
merchants and Congress lately and could potentially be
modified if certain members of Congress have their way. The
fees are paid by retailers and merchants such as
Best Buy (NYSE: BBY) to payment-card issuers
such as
Citigroup (NYSE: C),
Bank of America (NYSE: BAC), and
Capital One (NYSE: COF), who in turn pay Visa
or
MasterCard (NYSE: MA). Investors fear that
lower fees will
have a detrimental effecton Visa's top line.
3. Overpriced
Many CAPS members think Visa's shares are trading at
too high a premium today. The company has a strong business,
with investors
expecting strong earnings growthin the years ahead, but
current prices for shares already fully reflect this
thinking. Many still see a lot of uncertainty in just how the
economy will progress from here. And with few signs of a
recovery in the credit card industry, strong returns may
be difficult to come by at today's prices.
To see details of what CAPS members
are saying
nowabout Visa, just head on over to
Motley Fool CAPSand have a look -- or add your own
thoughts in the comments box below.
This article was originally published as
3 Reasons to Sell Visa Todayon
Fool.com
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reserved.
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