Tuesday, March 4, 2008

Visa IPO Question

I am expecting an intitial surge based purely on momentum. Then a
slight pull-back, I don't see it dropping below it's IPO price. Most
people are betting it will do well based on MasterCards IPO. The only
difference is MC opened around 19$/share which put it in a low PE in the
low teens I think. Currently MC is trading around a PE of 22-25. Visa
will open, if it opens at about $40, at a PE around 22-25. So unless
there is a lot of interest it might not grow as quickly as MC (400% in
two years). I am looking to make a quick profit, take it out and then
wait for the pullback to buy as a long term holding. VMW shot to 125
before it pulled back. Now it's back around $60. It's PE was off the
chart to start with. As IBD says PE doesn't always mean anything. I
have seen a lot of conflicting information about how much international
market share Visa has compared to MC which, in today's environment, can
make a difference. It is planning on reserving cash for its litigation.
So I don't see much risk in the investment, just need to keep taps on
the expectations.

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