MA Stock Great Wealth-Creating Track Records
Any large-cap portfolio is well served with a credit card position and Mastercard Inc (NYSE:MA) stock is a proven wealth creator.
This stock has a long track record of solid capital gains and dividend payments to shareholders. But the good news for investors now is that the company’s outlook predicts a sales acceleration in 2017 over this year—and that’s with currency translation as part of the equation.
It’s not that the company’s latest results weren’t solid. In fact, in the fourth quarter of 2015, Mastercard generated diluted earnings-per-share growth of 14% (22% adjusted for currency). As well, net revenue for the quarter improved four percent comparatively to $2.5 billion.
Mastercard also experienced double-digit quarterly growth in local currency gross dollar volume, processed transactions, and cross-border volumes. Plus, global purchase volume during the fourth quarter of 2015 was up 12% on a local currency basis over the fourth quarter of 2014.
MA stock’s long-term chart is featured below:
Chart courtesy of www.StockCharts.com
Historically, Mastercard has been a worthwhile stock to accumulate on major price retrenchments. This is something for large-cap investors to keep in mind if they’re searching the equity market universe for new buying opportunities.
As a group, the branded credit card companies have provided equity investors with solid capital gains over the years and Mastercard is one of the best outperformers.
Naturally, being such a decent business to be in, the stock is not cheaply priced. It is often the case, though, that you get what you pay for with assets.
Institutional investors love credit card companies because they are large, liquid, provide earnings predictability, often offer double-digit growth, and pay out dividend.
At the beginning of a rising interest rate environment, financial lenders like banks and credit card companies can accelerate their earnings because of widening rate spreads. Consumers pay for this, of course, but we’re looking at this story from the investor’s perspective.
The Bottom Line on MA Stock
If you pull up a number of yearly financial results from Mastercard, you’ll notice quite a consistency in the company’s total sales and net income growth.
This consistency is a coveted investment feature and many of the market’s best businesses can’t match Mastercard’s historical track record of financial growth.
Naturally, the past can’t predict future performance, but consistency of financial performance is just one more positive attribute to consider in a stock.
What’s important in this market is investment quality and strong adherence to overall portfolio risk. Even if the Federal Reserve does “slow” the rate in which it introduces rate increases, this is the beginning of a new interest rate cycle and that means that equities (which previously did amazingly well due to unprecedented monetary stimulus) are more and more vulnerable.
This is why I like Mastercard Inc stock for investment-grade portfolios. It offers the earnings visibility that investors are looking for combined with an operational and share price track record that is enviable.