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Posts tagged ‘Visa’

Credit Card Stocks on Fire in 2012!! Capitol One Financial(COF) Options?! By: Tim Bolger

Capitol One Financial (COF) stock has been on fire in 2012 and is one of my top stock picks in the credit card/financial services space for this year. Read more on the bio of COF courtesy of Yahoo Finance: Capital One Financial Corporation operates as the bank holding company for the Capital One Bank (USA), National Association (COBNA), and Capital One, National Association (CONA), which provide various financial products and services in the United States, the United Kingdom, and Canada. It offers consumer and small business credit card lending, national closed end installment lending, and the international credit card lending services. The company also provides various non-interest bearing and interest-bearing deposits, including demand deposits, money market deposits, negotiable order of withdrawal accounts, savings accounts, certificates of deposit, and other consumer time deposits. Its loan portfolio comprises credit card loans; consumer loans, such as auto, home, and retail banking loans; and commercial loans, including commercial and multifamily real estate, middle market, specialty lending, and small-ticket commercial real estate loans. In addition, the company provides mortgage banking, treasury management, and depository services. It primarily serves consumers, small businesses, and commercial clients through branches, the Internet, and other distribution channels. The company was founded in 1993 and is headquartered in McLean, Virginia.

Why do I love Capital One Financial (COF)?? This stock has been on a tear over the last couple of years and still looks very attractive from a fundamental valuation perspective. Currently, COF trades at $56.01(2;03p.m. EST), with a trailing Price to Earnings ratio of 8.23 and has a Price to Book value of .87. The book value of COF is $65.17 a share. In comparison to Visa (V), currently trading at $118.06 (2:04 p.m. EST), which has a trailing Price to Earnings ratio of 20.90 and has a Price to Book value of 2.94. The book value of V is $40.61 a share and is trading at a significant premium based on the Price to Book metric.  However, V is still an amazing growth story and it’s extremely important to note that V has zero exposure to losses from consumer defaults on credit card debt. This is in contrast to COF, which has great exposure to consumer defaults, because it lends alot of its own capital. Fortunately, for COF, consumer defaults have been declining as the global economy continues to improve and that has helped propel the stock even higher.

I love Visa (V) stock as well and would be a buyer of this stock under $110 per share. I believe V may run to $150 a share in 2012 and is truly another amazing success story in the San Francisco Bay Area. From a valuation perspective, I am a bigger proponent of owning shares of COF right now. COF could run to $80 in the next twelve months and next stop may be $100 per share…Legendary Hedge Fund Manager and Billonaire investor: John Paulson of Paulson & Company Inc., is one of the largest shareholders of COF, with his managed funds owning 9,420,000 shares of COF.

Capitol One Financial (COF) reports earnings on April 19, 2012. Analysts are anticipating a great quarterly report from COF. Will the company blow past Analyst earnings estimates?? And, what is the Options play on COF ahead of earnings? As you can see from the COF data below, courtesy of Yahoo Finance, COF has beat analyst expectations in three of their last four quarterly earnings reports. Clearly, the weakest financial report was their most recent one in December of 2011, in which they missed Analyst earnings expectations by 43.60%. Ouch! Yes, that was a terrible earnings miss, but I think this upcoming quarterly earnings report is going to be stellar and only time will tell the real story…Visa reported blow out numbers and I think COF earnings will thrill investors as well!!

Earnings History Mar 11 Jun 11 Sep 11 Dec 11
EPS Est 1.55 1.71 1.68 1.56
EPS Actual 2.21 1.97 1.77 0.88
Difference 0.66 0.26 0.09 -0.68
Surprise % 42.60% 15.20% 5.40% -43.60%

 

Trade#1: I would consider buying the Capitol One Financial(COF) $57.50 strike Call Options for $1.00 with an April 20, 2012 expiration. Attached are the COF Options chains with an April 20, 2012 expiration date courtesy of Yahoo Finance:http://finance.yahoo.com/q/op?s=COF+Options. If I buy 10 Call Option contracts, it will cost me $1,000 plus trading fees to get long exposure to 1,000 shares of COF at $57.50. I think that COF stock could trade to $65 per share if the company beats Analyst earnings expectations next month and gives an upbeat earnings guidance for the full year of 2012. Additionally, any positive comments by management on the conference call about a continued decline in consumer credit card defaults, would be another catalyst to propel COF stock much higher. If COF trades to $65 a share by the expiration of these Call Options, this trade will be worth at least $7,500 ($750 per contract x 10 contracts= $7,500 minus trading fees). Good luck COF bulls and remember that Options trading is very risky and to always consult your investment advisor before buying/selling any equity securities and/or Options contracts.

 

Trade#2: For the longer term bull in COF, I would consider buying the COF $57.50 strike Call Options for $3.50 per contract with a Sept 21, 2012 expiration date. Attached are the COF Options chains with a Sept 21, 2012 expiration date courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=COF&m=2012-09. I can buy 10 Call Option contracts for $3,500, in which I will be paying a premimum for more time value to allow COF shares to potentially climb much higher over the next several months. If the shares of COF trade to $70 a share over the next several months, this trade will be worth at least $12,500.  Good luck to all of the COF Bulls and stay tuned to http://www.Optionshoney.com for more monster Options trades!

Check out the Technical Chart on Capitol One Financial below (COF) courtesy of FinViz:

Bull Market Turns Green in Late Trade!! Visa Call Options Active Ahead of Earnings! By: Tim Bolger

After being in the red most of the day, all of the major U.S. stock indexes turn Green in late trade…The Bulls are in control of this market and stocks continue to grind higher.  Apple(AAPL) is hitting another record high stock price, with an intraday high of $475.15.  Yup, Aapl is approaching a market capitalization of 1/2 trillion U.S. Dollars…and that Tech giant is amazing!! Stock runs to $550 in 2012 in my opinion.  Sorry Exxon Mobile…

About Visa

Visa(V) reports after the bell and I am long the V $110 and $115 strike Feb 17, 2012 Call Options into earnings. Attached is the Feb 17, 2012 V Options Chains courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=V+Options.  Check out the volume on the Feb 17, 2012 $110 and $115 strike V Call Options and prices jumping ahead of earnings today after the bell!! I took some profits off the table earlier today on a few of my Visa options contracts and I am hoping for a big earnings beat!! Visa is rallying this afternoon around 1% and the stock is approaching a record high price. I think V could run to $150 a share in 2012 and I am hopeful for an upbeat full year 2012 earnings and revenue guidance that beats the street expectations after the bell!! Keep an eye on BAC, GS, JPM, GNW, and C. All of these financial stocks are set to fly in 2012 and still have huge upside potential…Stay tuned for more of the Options and Market buzz at Optionshoney.com. See below a ten day chart on V courtesy of Fidelity Investments:

Chart

OptionsHoney on Fire!! Call Options on Visa and KKR Financial Holdings Ahead Of Earnings?! By: Tim Bolger

It has been an amazing few weeks for everyone reading Optionshoney.com and jumping in on some of my Options plays!!  I hope everyone is both enjoying my posts and making lots of honey ( i mean money) on my investment research and Options plays.  GNW, GS,  AAWW, POT, DANG, AVL, HL, etc have all been huge winners in 2012 and I have never been more focused in my entire life on hitting home runs…  My 4-5 years of following a majority of the stocks that I am designing Options trades on is starting to pay off tenfold.  I conduct rigorous fundamental research analysis on all of these companies that I post on and I follow the technicals closely as well… GNW and GS being the biggest returns thus far in 2012…

What is my Options play now?! I love Visa and KKR Financial Holdings ahead of earnings.  Both companies are headquartered in the San Francisco Bay Area and that is a place I call home…After Mastercard smashed earnings estimates this past week, I am long the $110 and $115 strike Feb Call Options on Visa(V). Attached is the Feb 17, 2012 Options Chain on V Call/Put Options courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=V+Options.  If V blows past estimates on Feb 8, 2012 and investors pile into shares, this could be a massive Options trade!!! More positive V news at: Visa Tops One M Chip Cards In The U.S.
DJ Realtime News – 8:00 AM ET 02/06/2012.

I am also long KKR Financial(KFN)  into earnings after the bell today. Check out the company at:   http://www.kkrfinancial.com. I own the April 2012 KFN $10 strike Call Options for a nickel and the April 2012 KFN $9 strike Call Options for .25 cents.  Here is the Options Chain for the April 2012 Call/Put Options on KFN courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=KFN&m=2012-04. KFN is rallying a few percent today ahead of earnings and I am looking for this stock to break out to the upside on a good earnings report after the bell today.  KFN is trading at $9.22 right now and is up 21 cents on a negative day across all the major U.S. stock indexes. KFN is headquartered in lovely San Francisco and is poised to pop.  KFN has a trailing P/E of 5.1 and pays an 8% dividend.  Yes, this is a great value stock and pays an awesome dividend. I think this stock could easily trade to $17-20 dollars in a couple of years.  Go KFN Bulls…and who doesn’t love getting paid an 8% return on your money, while you wait for appreciation in this stock?!!

A profile on KFN courtesy of Yahoo finance:  KKR Financial Holdings LLC, together with its subsidiaries, operates as a specialty finance company with expertise in a range of asset classes. It primarily invests in financial assets, such as below investment grade corporate debt, including senior secured and unsecured loans, mezzanine loans, high yield corporate bonds, and distressed and stressed debt securities; marketable equity securities; and private equity. The company also invests in other asset classes, including natural resources and real estate. Its corporate debt investments are held in collateralized loan obligation (CLO) transactions that the company uses as long term financing for these investments. The senior secured notes issued by the CLO transactions are owned by unaffiliated third party investors and the company owns the majority of the mezzanine and subordinated notes in the CLO transactions. KKR Financial Advisors LLC serves as the manager of the company. KKR Financial Holdings LLC was founded in 2004 and is based in San Francisco, California.   Check out the ten day technical chart courtesy of Fidelity Investments on V and KFN below:

Chart

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