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The uptrend continues with credit card/payment solutions provider Mastercard Inc. (MA), and it goes without saying that I'm Reiterating my Buy rating for the company's shares, first recommended on April 13, 2009 at a price of $176.06. If you bought MA in April 2009, you're up about 48%. 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 credit card use. Revenue should increase an impressive 8-11% in 2010 after a likely 2-3% increase in 2009.
One downer: expenses are likely to rise in 2010, as MA's larger marketing budget offsets its cost cutting program.
Long 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 $11.44 to $13.56.
Technically, Mastercard's stock chart is strong -- an uptrend that has only briefly dipped to the key 50-day moving average -- a sign that institutional investors (IIs) are adding to/establishing positions in MA. Mastercard will encounter psychological resistance at $300, but this should prove to be minor. According to my analysis, MA is head north.
Finally, the Sell/Stop Loss has been raised to $176 or to just below cost; hence, this is an essentially zero-risk trade for your April 2009-bought shares.
2010 Outlook: Mastercard Inc. is a long-term play, but if you're looking to sell MA within the year, take your profits after it rises to $290 to $295 if it fails to rise above $300.
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 25% 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 March 2010. Revised Sell/Stop Loss if you bought shares in this company: $176.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Long 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 $11.44 to $13.56.
Technically, Mastercard's stock chart is strong -- an uptrend that has only briefly dipped to the key 50-day moving average -- a sign that institutional investors (IIs) are adding to/establishing positions in MA. Mastercard will encounter psychological resistance at $300, but this should prove to be minor. According to my analysis, MA is head north.
Finally, the Sell/Stop Loss has been raised to $176 or to just below cost; hence, this is an essentially zero-risk trade for your April 2009-bought shares.
2010 Outlook: Mastercard Inc. is a long-term play, but if you're looking to sell MA within the year, take your profits after it rises to $290 to $295 if it fails to rise above $300.
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 25% 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 March 2010. Revised Sell/Stop Loss if you bought shares in this company: $176.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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