By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 8/8/11 Sign up for free Cabot Wealth Advisory e-newsletter
My favorite way to hunt at times like this is to look for stocks that are holding up extremely well. Those are the stocks in which there are very few motivated sellers, stocks that have such support that every share offered is quickly snapped up at current prices. And when the pressure comes off the broad market, those are the stocks most likely to soar!
One acting well today is MasterCard (MA).
You know the business. It pulled in $6 billion in revenue last year, and 58% of that was from outside the U.S.
It grew revenues 9% last quarter and earnings 24% and analysts are looking for earnings growth of 26% for all of 2011.
And it's still a rather young stock!
MA began trading in mid-2006, peaked with the broad market at 320 in mid-2007, and bottomed with the broad market late in 2008.
Since then it's been working its way back to that old high, and for the past month it's been knocking on the 320 level, trying to break out to new highs. Last Wednesday, it did break out after issuing an excellent earnings report, but got dragged down by the market. Still, the stock is within spitting distance of new highs, and I think it's only a matter of time.
Supporting this reasoning is the fact the stock is a far better value now than it was when it first fit this level, four years ago! Earnings in 2010 were up 146% from 2007 and this year they'll be higher still.
Just last month, Roy Ward, editor of Cabot Benjamin Graham Value Letter, added MA to his Wise Owl Portfolio. His Maximum Buy Price is 306; buying under that level gets you a Margin of Safety. And his Minimum Sell Price is 435.
To stay informed about MasterCard, and to get more smart value investing ideas, click here.
From Cabot Wealth Advisory, 6/25/08 Sign up for free Cabot Wealth Advisory e-newsletter
I often think the world could use a brighter outlook, not only because it would make certain people—you know who they are—feel better but also because there are always great opportunities to invest in growth companies, and these opportunities are best appreciated if you approach the future optimistically.
A case in point is MasterCard (MA), a stock I recommended as Cabot Stock of the Month on December 27, 2007, almost six months ago. You know MasterCard; you've probably got one in your wallet. Back in December, of course, the media had been recycling their tired old "Many retailers are worried about the shopping season," stories, warning that shrinking home values and reduced credit might combine to make an un-cheery holiday season.
If you had listened to them, and deferred investing in MasterCard, fearing that credit card use would drop, where would you be today? Well, you wouldn't be 32% richer, like the people who bought MasterCard when I recommended it!
The big story behind MasterCard, you see, is not about American consumers buying more. First, it's about globalization, as consumers in China and India and other fast-growing countries begin using credit cards as their incomes grow. And second, it's about the increasing use of plastic for all transactions in the U.S., while the use of cash continues to shrink, year after year.
MasterCard still looks good, and I'm advising Cabot Stock of the Month Report subscribers to hang on tight to their shares.
President, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.
|MasterCard Incorporated (MA)
2000 Purchase Street
Purchase, New York 10577
|Index Membership: S&P 100, S&P 500, S&P 1500 Super Comp |
Industry: Business Services
Full Time Employees: 5,100