Great Call on Visa! What's Next?

Life may take Visa (NYSE: V  ) , but can Visa take a crummy stock market? Though Visa's stock has declined around 20% from the highs it hit after its March IPO, it has held up well in a market that is taking a jackhammer to the shares of most financial-services companies.

That assumes, of course, that you lump Visa and its close competitor MasterCard (NYSE: MA  ) under the "financial services" heading. But since both companies make their money from transaction processing, as opposed to making loans, they've been able to avoid a lot of the turmoil that has hit the companies that actually make the loans.

On CAPS, there are more than 3,700 investors currently following the ups and downs of Visa and weighing in on its future, and none has been more right on the money than law1180. law1180 gave the thumbs-up to Visa right after its IPO and then closed his outperform call in early May -- just about at the stock's peak.

law1180 is one of CAPS' All-Stars -- players with a rating of 80 or greater -- and he has managed a stock-picking accuracy of 66% on his calls while racking up 190 points. Visa hasn't been his only great call. Here's a look at a few of his other prescient picks:

Company

Date Picked

Call

Points

CAPS Rating (out of 5)

Lehman Brothers (NYSE: LEH  )

3/17/08

Outperform

73

*

ICx Technologies (Nasdaq: ICXT  )

3/14/08

Outperform

32

**

Zoltek Companies (Nasdaq: ZOLT  )

5/5/08

Outperform

32

***

Data from CAPS.

So what is this investor looking at these days? Here are a few of his most recent calls on CAPS:

Company

Date Picked

Call

CAPS Rating

National City (NYSE: NCC  )

5/21/08

Outperform

*

US Shipping Partners

5/20/08

Outperform

**

Fortress Investment Group (NYSE: FIG  )

5/9/08

Underperform

*

Data from CAPS.

While not all of these picks may pan out, they could be a good place to start some further research. I decided to take a closer look at National City.

Breaking the banks
Why would anybody be optimistic about bank stocks right now? The easy answer is that there will be winners amid the rubbish. Though it's likely that we'll see the FDIC -- a.k.a. the banking Angel of Death -- knocking at the door of a few more banks, not everyone is going to share the fate of IndyMac.

The extent to which bank stocks have been beaten down means that the banks that come out the other side only mildly scathed will be big winners for investors. It's finding those safe picks in a mortgage minefield that's the tricky part. Along with law1180, CAPS All-Star lautenholdings thinks National City is a good bet, rating it an outperform at the end of last month:

Though it is in a tough sector, I see National City making it through. They have made some good recent regional buys. I believe in them and think they are a good pick to outperform in the years ahead.

Among CAPS' top players, though, law1180 and lautenholdings are in the minority by a long shot. Of the 321 All-Stars who have rated the stock, an overwhelming 256 of them see more pain ahead for National City and have called it an underperformer. MarketBottom, one of the many bears, chimed in back in late May, saying:

Banks, mortgage companies, and financials in general will surely find the environment going forward challenging. The consumer is struggling, and all forms of credit are seeing rising loses. Thumbs down for this sector for the foreseeable future. Additional capital will be required by regulators, and the appetite for risk has decreased dramatically over the last year. The FDIC is calling retired former employees back to deal with the potential collapse of 300 to 1,000 banks in the coming year or two. In this descending cycle it will become more and more difficult to grow profits and expand while actual consolidation of the industry is taking place.

So what's your take on National City? Get in on the action by clicking over to CAPS. CAPS is absolutely free and already has more than 110,000 stock pickers chipping in to find the best stocks out there.

More CAPS Foolishness:

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool’s disclosure policy made its own great call by making sure all of its bank accounts are under the FDIC limits.


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