Wednesday, October 31, 2007

Bravo Mastercard (MA)

Mastercard (MA) is up 13% as we open the day on stellar earnings. As I mentioned on my bullish piece on Mastercard 2 weeks ago,

granted its a financial company but it is basically a transaction company, simple as that. Further, half of its revenue is overseas and I expect that to continue to grow as we get the middle class of Brazil, China, India, et al up and running.

And it appears overseas revenue is driving this "stealth" global growth play.

Via AP
  • MasterCard Inc., the world's No. 2 credit card processor, said Wednesday that increased cardholder spending, particularly overseas, boosted its profit by 63 percent in the third quarter.
  • Profit in the July to September period was $314 million, or $2.31 a share, up from $193 million, or $1.42 a share, a year ago. The latest results include after-tax gains from the partial sale of its investment in Redecard SA, a company that signs up merchants in Brazil. Excluding that gain, profit came to $1.80 per share.
  • Revenue rose 20 percent to a record $1.08 billion from $902 million a year ago.
  • The results beat estimates. Analysts polled by Thomson Financial predicted earnings of $1.42 per share on revenue of $1.03 billion.
  • "We continue to benefit from positive secular trends and outstanding growth in international and emerging markets," said Robert W. Selander, MasterCard's president and chief executive officer, in a statement.
  • MasterCard's results did reflect a slowdown in the United States, but that softness was offset by significant gains in Latin America, South Asia, the Middle East, Africa and Europe.
  • Total gross dollar volume gained 12.8 percent to $577 billion, and the number of total transactions processed rose13.3 percent to 4.8 billion. Cross-border transactions rose 20.6 percent in the most recent quarter. Worldwide purchase volume rose 14.1 percent to $430 billion.
I did pull back a bit on this position ahead of earnings since the stock has usually sold off post earnings, but looks like investors are happy today. Continue to be very bullish on this stock for the long run - essentially a duopoly and an unrecognized global growth stock.

Long Mastercard in fund; no personal position


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