The swiping sound trend continues, which is why I'm Reiterating my Buy rating for MasterCard Inc. (NYSE: MA), first recommended on April 13, 2009 at a price of $176.06. If you bought MA in April, you're up about 26%.The pleasant story continues at MasterCard: MA has emerged from the nation's worst recession in more than 25 years in enviable shape, even amid the 'frugal consumer' era that's likely to restrict U.S. consumer spending. Look for transaction growth to continue, as a result of the U.S./global trend toward increased use of credit cards in purchases.
In FY2009, revenue should increase 2-3.5%. Longer term, there are plenty of opportunities for MA to generate strong growth - from debit card growth to emerging market expansion, to prepaid cards, to contactless payment solutions. The First Call FY2009/FY2010 EPS estimates for MA are $11.02 to $13.00.
Technically, MasterCard's stock chart is strong – an uptrend that has only briefly dipped to the key 50-day moving average. A golden cross, in which the 50-day MA crosses above the 200-day MA – a bullish sign, adds to the positive technical story.
Stock Analysis: MasterCard Inc. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in MA now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your MA position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $85.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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