Credit Card Spending on the Global Rise 16 comments
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Yesterday it was Visa (V), and today Mastercard (MA) reported its earnings. The results for both were good, with Mastercard earning more than double last Q1 at $446.9 million, or $3.38 per share up from $214.9 million, or $1.57 a share last year. Some of these earnings came from “one time” events such as the sale of holdings in Brazilian company Redecard. Even after excluding those earnings, the results were still far better than what analysts had expected at $2.59 vs the expected $2.
Internationally, Mastercard had a surge in gross spending volume of 30% with regions such as Latin America, South Asia, the Middle East and Africa showing strong card growth. Much of this is probably due to the lower dollar which give those outside the US higher purchasing power in dollar-denominated goods and gives US companies higher dollar profits when they book income made abroad.
Mastercard’s gross US dollar volume also rose, although somewhat less, to 8.9%, indicating that US consumers are spending more on credit and debit cards. However, Mastercard’s CEO Robert Selander said that US consumers continue to move away from luxury purchases towards necesities like food and gas, which are both rising in cost. What this looks like is that US consumers are being squeezed: on the one hand their home equity has gone down tremendously, there is job insecurity and increasing unemployment, and on the other hand the basic cost of living is going up so much that they have to increase spending just to cover the bare necessities. This seems a lot like stagflation.
As if to underline this possibility, Countrywide (CFC), the largest mortgage lender in the US reported a loss of $893 million in Q1; the S&P/Case-Shiller home price index reported a 12.7% fall in February, and BP (BP) reported a record 63% profit increase to $7.6 billion from $4.4 billion last Q1 on the back of record breaking oil prices. The companies making money now are those that have a strong international presence or those whose profit is strongly correlated to the rising commodities prices.
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This article has 16 comments:
My thoughts are here:
www.investorslive.com/.../
V closed at 80.88 today!
Yes, Investors Live- Will see you at 100$
V has been around for 30 years and is has better name brand recognition than 99% of the companies on earth.
Keep doubting- I've made more money on V in the last 30 days than most people make in a year........
But don't forget to use your Visa card- which I'm sure each of you has :0
I'm so admire you sir, i also have made so much money on V
The US economy is still the dog wagging the tail of the global economy. If it turns out the we avoided a recession not only will our market be on the way to a 15,000. point dow- but the rest of the world will respond accordingly. Money is already poaring back into equities from the commodities markets- and when the fed announces that it is done cutting rates we will see trillions of dollars come back into stocks from the cash sitting on the sidelines and the shift out of alternative investments and hedges. V will be a beneficiary.
Expect to see V trading over 100$ within 90 days (if not sooner).
42,000,000- shares traded hands yesterday- blowing out the previous high by 17,000,000 shares. That was not aunt milly buying shares from her Ameritrade account. Institutional money will scoop up the float.
HOPE for a 3$ pullback this week - and IF you see it - use that as your entry point for the last big dip you will see pre-100$
Good luck- I bought more shares this morning on GDP #s alone- I'm betting that small money has already exited - paving the way for real V investors and not hit and run speculators.
Good Luck
If we V buyers had listened to the pundits, we would have passed on this great stock . Cramer screaming "sell, sell, sell, when V was in the $60 range. The morons on Fast Money saying the price will go back to the IPO price ! Tons of financial prognosticators all getting it wrong, or not getting it at all. We are sick of all of you. I personally will not watch CNBC again, switched to Bloomberg coverage. The CNBC cheerleaders, smiley faces, are useless. Cramer is beyond idiotic and is severely undermedicated.
V and MA are quite simply: GREAT !! And, I don't have a Wharton degree. Yet, I was able to figure that out all by myself, DUH !
Fast money?? You are right stacked up-
Fast money recommended the following in the last week:
EMC - LOST
YAHOO- JOKE- lost
Microsoft- What a pick - down 6% on earning
I wouldn't listen to anything Fast money or Cramer says-
OTHER THAN- the same advice I have for Seeking Alpha posts-
If all you did in investments was the OPPOSITE of what -
FM/Jcramer & Seeking Alpha did- you would make a fortune-
We should start a contrarian index fund just to trade against those 3 'expert sources'------ :)
I have been reading your posts, made an investment in Visa, and paid off very well. I also made an investment in MA and it paid off very well too.
The question is V can't run forever because ultimately every stock is guided by hard revenue numbers and profits. V has indicated 11-12% growth. The market cap of V has to correspond to these revenue numbers and it just can't go up forever unless of course the revenue and profit numbers go up at a dizzying pace.
When you say V will reach $300 can you shed some light on the numbers that you are twirling around so that I feel safe with V over the longer run?
Thanks,
No- V can't keep running (as fast)- thats a fact- Rather than deal with opinion and conjecture - I recommend that you (and anyone interested in V)- Go to the Visa corporate website (not the cardholder but corporate)- Take a look at the powerpoint from the quarterly conference call on Monday. This will enlighten you.
Keep in mind that 11/12% year over year - is a conservative estimate - global expansion was factored in at a much smaller rate than they are already achieving. Whats more important is the cash to plastic transition thats taking place right now- and I think this area is greatly under-represented in all the predictions.
Now - what I have said all along is that I expect V to be 100 within the next 2 quarters (but the way things have gone lately - that should happen within a quarter now).
Sometimes stocks make their own rules.....Visa is the biggest ATM on earth for those that own shares. The reason that people are buying the stock is that Investors are confident that the co will grow into its PE-
I believe we will hit 200 in 2009 (which V has predicted would be a much more profitable year), and that it will hit 300 in 2010- by the time the company has settled most litigation and the transformation from cash to plastic is further along.
What 25billion dollar + company has less than 5000 employees, almost no cost to produce the product if offers, minimal overhead, and such a huge profit margin? Answer that as I would love to invest..