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Georges Yared

For 30 years, Georges Yared has helped investors pick companies that break the mold. Companies like Color Kinetics, Kyphon, Apple and aQuantive—all tripled for his readers in the past 18 months.

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Hot Stocks

Visa: Buy This Game-Changing IPO!

March 18, 2008

By Georges Yared, Editor, GameChangers

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I have a great deal of experience in initial and secondary public offerings, having been involved with over 200 in my 30 years as a professional investor.

During the go-go 1990s, any company that moved and could offer up a three-page business plan came to the public markets. As you would expect, most were not ready for prime time and shouldn't even have seen the light of day.

At my firm, Wessels, Arnold & Henderson, we were known to be extremely selective in the companies we brought public. I could also fill a whole book with stories about companies we chose not to do business with. A lot of the 1990s IPOs were what we called "profit-proof"–they had no hope of ever turning a profit. Hard to believe, but some management teams just couldn't quite understand why that was important!

But even we still had some turkeys. The worst one I remember was a maker of audio speakers called Rockford Fosgate. I had a bad feeling about this one early on, and I absolutely knew we had a problem when the CEO showed up in London with his own six-pack of beer!

Sure enough, the company failed to match Wall Street's financial expectations its first quarter out of the box and was a disaster. Oh, it's still around, and it continues to disappoint investors. But the speakers are actually pretty good!

Fortunately, my clients were very forgiving as we had just made them a ton of money with a company called WebTrends. The stock came public at $16 and shot up to $88 fairly quickly–a nice 450% gain! We had many other successes that created tremendous wealth, companies like Ascend Communications, Ciena, J.Jill, Cascade Communications, and many more.

A Game-Changing IPO!

My instinct is to avoid IPOs right off the bat as most are newer companies that just aren't mature enough to operate in the public arena. I generally prefer to see a quarter or two of solid results and performance before investing my hard-earned money. If a company can meet or beat expectations the first couple of quarters after going public, it goes on my radar screen.

Why do I wait? Because management teams are used to the private world where their investors are typically venture capitalists (VCs) who nurture them along. In that environment, underperformance is handled internally. It's like raising your kids–they may make mistakes, but you try to keep them within the privacy of your home!

But the public markets are unforgiving. A company that misses projections its first or second quarter after going public (like Rockford Fosgate) is dealt with harshly and quickly. Wall Street traders can knock a stock down in a heartbeat. Think of it as your kid wrecking the car–a mistake that everyone else knows about.

But every once in a while, there is a unique IPO worth buying right from the start, and Visa is one of them. Visa is already a GameChanger. We just haven't had a chance to invest in it until now. I believe we'll double our money within the next two years and probably make even more than that over time. That's why I want you to be involved as soon as possible.

Quite simply, Visa is the largest processor of credit card transactions in the world. It handled over 44 billion transactions last year, representing over $3.2 trillion in purchases. This is twice the size of its nearest competitor, MasterCard.

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A Double–or More!

Now here's the fun part. Let's talk about what I expect the stock to do!

Valuing stocks is much like valuing real estate. You start with the comparables and go from there. MasterCard is the only company that compares with Visa. It, too, is a processor and does not underwrite actually credit card debt.

Here's what happened with MasterCard: It went public just a few years ago–May 25, 2006, to be exact–and it has been extremely successful by any measure. The stock has more than quadrupled in just two years. The biggest reason for its success is that the company is not exposed to any underlying credit risk.

And here's the best part: Visa enjoys the exact same competitive advantage, but it is twice the size of MasterCard and growing faster!

Ultimately, however, I believe a more accurate comparison is with our other GameChangers, like Google (GOOG). That's why I think my initial target of a double may well be conservative.

This is going to be fun and extremely profitable!

Don't miss out on this one! For my guidance on how to buy, what price to pay and regular updates as this massive IPO unfolds over the coming days and weeks, I invite you to join us today. You'll get immediate access to my latest advice on exactly how to play this IPO, as well as every update I send my GameChanger subscribers. PLUS, you'll save $100! Click here to take advantage of this special offer now!

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