This credit card holding may have put in a bottom this week
The MasterCard logo on a smartphone arranged in Saint Thomas, Virgin Islands.
Gabby Jones | Bloomberg | Getty Images
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The Investing Club team is currently preparing our Friday afternoon newsletter, where we summarize the trading week that was and call out next week’s most important market moving events.
But before today’s trading session is over, we want to circle back to a holding in the Charitable Trust that hosted a bullish investment community event which may have put in a bottom for the stock. We are talking about Mastercard.
As we mentioned the other day, management used the event to highlight their strategic priorities in payments and how they plan to drive growth in consumer purchases, capture new payment flows, and create opportunities through new technologies and shifting payment preferences.
Secular shift to electronic payments
One thing to remember about Mastercard is that the stock is a play on the secular shift from cash to card and electronic payments. Mastercard estimates the consumer-to-business payment market is a $45 trillion opportunity of which $20 trillion is carded. With roughly $25 trillion of consumer spending still uncarded, we believe Mastercard’s business still has plenty of room for growth.
Furthermore, we appreciate the long-term visibility management provided with their guidance. For the 2022 to 2024 period, Mastercard expects a net revenue compound annual growth rate in the high teens with annual operating margins of 50% at a minimum and an earnings per share compound annual growth rate in the low twenties.
Mastercard’s outlook was better than what the consensus was expecting, meaning earnings estimates have been revised higher to reflect the faster than expected new growth rate.
Keep an eye out on Mastercard as a stock to climb back to and overtake its all-time high.
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(Jim Cramer’s Charitable Trust is long MA.)