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This week we are recommending what might be viewed as a credit giant caught up in the financial mess that brought the economy to its knees. The reality is that this company is actually very healthy and poised to grow both domestically and globally. The move from paper to plastic in an undeniable trend that will continue and this company will grow because of it. The company is already an industry leader and its business is a virtual oligopoly with 3 other players, but none has its upside. Our Bearish pick made news this week because it has opened its network to new technologies, in this case on that may hurt its bottom line. Right now its partnership with Apple is fragile and cooperation seems to be the only option. The problem is that this partnership might be coming to an end or at least its exclusivity is being threatened. Either way, after the New Year we expect the stock price to fall as negotiations to maintain its exclusivity with Apple will be volatile. |
 Visa, Inc. (V) - This credit card company has nothing to do with the financial mess going on. You might think it gets affected because the number of transactions on credit cards are down, transactions being the way these companies make money. It's true they are down, but debit transactions are way up and it makes no difference to Visa how the transactions are made or the amounts the transactions are. We pick Visa over Mastercard and Amex because Visa is the king of debit transactions. The world is moving towards plastic over paper and this is a big play on that. We don't expect more competition to emerge as this is a very hard business to start, just ask Discover. Visa is now a "for profit" business, something that it wasn't just 10 months ago and it has just locked up 11 contracts with credit card issuers that represents 26% of the global volume and 36% of its US volume, no other major contracts are due for years.
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 AT&T (T) - AT&T has just agreed to allow VOIP access over its network. This might seem like the communications giant is moving towards a less paranoid stance towards 3rd party techonology, but the truth is that this will allow smartphone users to move towards using Vonage and Skype, just like people with high-speed internet access at home are using VOIP to make calls more and more. Another concern for investors is Verizon's 3G network, which is said to be faster and broader than AT&T’s, enticing for a iPhone-Verizon partnership. As the iPhone's exclusive deal with AT&T comes up for renewal next year, it seems AT&T is preparing for a potential split. Even a strong rumor of a split will send the stock down 10%.
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