The Buzz In The Market: Visa and Master Card

According to analysts, Visa and Master Card will grow at %19 in the next few years.

The buzz in the market is about Visa (V) and Master Card (MA): In the year 2012 it was hard to pick a stock which didn’t grow…Visa and Master Card, like many other stocks, grew as well. However, if you look at the price trends, these two companies have been growing since 2008 and their share price has increased more than %150.

One may assume this is because people are getting out of the recession mood and are spending again; the other might assume this is because people are now more responsible in using their credit cards and finally this may be because people are increasingly preferring using their cards instead of cash (growth in several international markets might be an evidence for this).

Whatever the reason is, analysts point out that this growth is not going to stop: Both credit card companies are supposed to grow at around %19 for the next few years and although, at the first glance, they might seem very expensive stocks with a multiple of around 20, they are not: As a matter of fact, they will offer better value compared to commercial banks.

One more thing: With all hype around the mobile commerce, Visa’s stake in Square mobile payment system, and Master Card’s partnership with Google is a hedge for their future profitability…We would like to see if our optimistic view towards these companies will come true or not, but so far the evidence points to great potential.