If there is one international business in which you could still say, “business is booming,” it would be Visa Inc. (NYSE/V). The company just reported its fiscal fourth-quarter and year-end financial results and the numbers were great. This company has been a powerhouse wealth-creator on the stock market and so far has been immune to the economic woes facing the largest economies.
The company’s revenues grew to $2.7 billion in its latest quarter, up from $2.4 billion. But after a tax reversal, earnings accelerated significantly to $1.7 billion, way up from $880 million in the same quarter last year.
Visa has been a top performer on the stock market over the last year. Currently trading around $140.00 a share, it was $90.00 a share this time last year. The stock is expensively priced, but then again, it has always been expensively priced. Visa is a large-cap, blue chip company with a lot of staying power. The company’s stock chart is featured below.
Chart courtesy of www.StockCharts.com
While a company like Visa is doing well due to grow in emerging markets, it’s more of an exception in this market. Companies like McDonalds Corporation (NYSE/MCD) and 3M Company (NYSE/MMM) have struggled to grow their earnings due to weakness in Europe, Japan, and China. McDonalds’ comparable sales in Europe actually grew 1.8% in the most recent quarter, but guest traffic fell. The company’s third-quarter earnings fell three percent to $1.5 billion on flat revenues. McDonalds’ stock chart is below.
Chart courtesy of www.StockCharts.com
So if there is one clear trend this latest earnings season, it’s that weakness abroad is definitely taking a toll on corporate revenues and earnings. U.S. operations are showing the most stability, and I think this should be a consideration for stock market investors looking at new positions. If there is any large economy that is best positioned to generate economic growth going forward it’s the U.S. economy. We’re not on the cusp of a new business cycle quite yet, but I don’t think one’s far off either.
Trading action in the stock market is still quite weak. Days that start positive tend to end negative. Investor sentiment has definitely changed since the QE3 rally this past summer. (Read “Want to Know Where Stocks Are Headed? Follow These Three.”)While I’m not advocating investors take on major new positions in this stock market, I would pick and choose among companies with sizeable domestic operations. The rest of the world is in much worse shape.
Where to Get the Best Earnings in This Stock Market was last modified: November 2nd, 2012 by Mitchell Clark, B.Comm.
Mitchell Clark is a senior editor at Lombardi Financial, specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, including Micro-Cap Reporter, Income for Life, Biotech Breakthrough Stock Report, and 100% Letter. Mitchell has been with Lombardi Financial for 17 years. He won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was a stockbroker for a large investment bank. In the... Read Full Bio »
Forecasts Aug. 31, 2015
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 31, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)