S&P 500   4,023.89
DOW   32,196.66
QQQ   301.94
S&P 500   4,023.89
DOW   32,196.66
QQQ   301.94
S&P 500   4,023.89
DOW   32,196.66
QQQ   301.94
S&P 500   4,023.89
DOW   32,196.66
QQQ   301.94

Mastercard (NYSE: MA) Steadies For The Next Stage Of The Rally

Thursday, January 7, 2021 | Sam Quirke
Mastercard (NYSE: MA) Steadies For The Next Stage Of The RallyShares of credit card giant Mastercard (NYSE: MA) have been trading sideways for much of the last four months as they consolidate their post pandemic gains. Unlike many tech names, and particularly work-from-home stocks, Mastercard and their peers have not seen the same retracement in their stock, which speaks volumes to both the sustainability of last year’s move and their potential for this year.

And with 2021’s calendar only just put up on the kitchen fridge, it’s starting to look like all the factors are in place for the next leg of their rally to begin.

On Wednesday, Bank of America were out with an upgrade to shares, moving them from Neutral to a Buy rating. In a note to clients, analyst Jason Kupferberg said “we believe Mastercard is an ideal way to get exposure to macro/consumer spending recovery as vaccine distribution accelerates, and find risk/reward attractive as shares have traded flat the past four months".

Catching The Wave

In a way, the COVID pandemic was the perfect storm for Mastercard. Despite a fast and furious dip in March, shares were always going to do well considering how much the COVID fuelled growth in online shopping and e-commerce accelerated. Now with vaccines started to be rolled out to the masses, they stand to do well from the coming boom in post pandemic spending as something like the old normal returns.

Kupferberg believes that gains in the digital payment industry are likely to stick around, as cash continues its slow march towards becoming obsolete. This only strengthens the “long-term structural bull case” for Mastercard and industry peers like Visa (NYSE: V) and Paypal (NASDAQ: PYPL). Despite the fact that consumers have leaned towards debit spending over credit in the past year, perhaps driven by an increase in caution, we should see a “narrowing of the gap between debit and credit volume growth” in the second half of 2021. It’s around this time that discretionary spending is expected to surge, with credit card heavy purchases like travel and events taking off.

This makes for an impressive bull case from the sell-side, but investors can also rely on management’s confidence. It was only last month that they upped their quarterly dividend by 10%, making sure that their multi-year record of dividend hikes remained unbroken. Increasing a dividend is one of the most bullish signals that management can give to investors about their confidence in being able to deliver and won’t go unnoticed.

On top of that, a fresh share buyback program was authorized, which will allow the company to buyback shares to the tune of $6 billion once the current program is completed. This is another strong signal to investors that management believes shares are undervalued at current prices and are more than happy to buy in themselves.

Bullish Moves

These updates come as many companies out there are still waiting to restart their share buyback programs or to reinstate their dividends. It speaks volumes to Mastercard’s self-belief in their short and long term potential that they’re willing to not only reinstate these measures but to increase them.

Investors will also be impressed by the strong cash position on the company’s balance sheet, which enables them to meet any challenges head on. Last quarter’s earning report had it at just over $10 billion, up more than 45% from the same time in 2019.

For a $350 billion company with an historical compound annual growth rate of 30%, there’s not a lot to dislike about Mastercard. The fact that shares have quiet in recent months makes them all the more attractive now for investors looking to freshen up portfolios for 2021.

Mastercard (NYSE: MA) Steadies For The Next Stage Of The Rally

Should you invest $1,000 in Mastercard right now?

Before you consider Mastercard, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Mastercard wasn't on the list.

While Mastercard currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Mastercard (MA)
3.2081 of 5 stars
PayPal (PYPL)
2.9107 of 5 stars
Compare These Stocks  Add These Stocks to My Watchlist 


Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau MarketBeat is rated as Great on TrustPilot

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.