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MasterCard - One Of My Strongest Conviction Holdings

Charles Fournier profile picture
Charles Fournier


  • This MasterCard stock analysis is based on Q3 2017 results released October 31, 2017 and the September 7, 2017 Investor Day presentation.
  • MA and V are the two highest convictions stocks amongst the ~50 companies in which my wife/I own shares.
  • MA likely gets overlooked by many investors because of its sub 1% dividend yield and short dividend history.
  • MA has a robust suite of products/services and new offerings are continually being developed/acquired. I foresee continued growth over the long-term.


On July 31, 2017 I wrote that:

  • MasterCard (NYSE: NYSE:MA) and VISA (NYSE:V) are two stocks I never intend to sell (other than to transfer them from registered to non-registered accounts as appropriate);
  • I had recently acquired an additional 400 MasterCard shares in a Locked-in Registered Retirement Savings Plan.

On October 30th I provided my opinion on V's Q3 results released October 25th. In this post I provide my opinion on MA's Q3 results released October 31st.

Of all the companies in which we own shares, MA and V are my two highest convictions stocks.

In the event you are not entirely familiar with the full nature of MA's business you may wish to review "Part 1, Item 1 - Business" in MA's FY 2016 Form 10-K Annual Report. Pages 6 -16 of the 104 page pdf document provide an excellent overview of MA's strategy, business, industry dynamics, revenue sources, competition, and (of course) the government regulation under which it must operate.

September 7, 2017 Investment Community Presentation

The first meaningful page of the presentation reflects the following chart.

Source: MA September 7, 2017 Investment Community Meeting Presentation

If this chart sparks any interest whatsoever, I strongly suggest you access the 83 page pdf presentation as I cannot possibly give it justice in this post.

In this presentation you will see what MA has identified as current and emerging trends, the magnitude of the growth potential, the extent to which highly sophisticated technological advances are opening new opportunities, an overview of the multiple geographic markets in which it competes, and its financial outlook.

Q3 2017 Financial Results

MA's October 31, 2017 Q3 Earnings Release can be found here and its Earnings Presentation can be found here.

Source: MA October 31, 2017 Q3 Financial Results Presentation

Outlook Raised


This article was written by

Charles Fournier profile picture
~34 years of investing experience. Conservative equities investor with a top down investment approach. I look for: * growth at a reasonable price.* I look at an investment's overall potential return and do not chase high dividend yielding stocks.* companies trading at or below fair value with strong fundamentals.I invite you to visit my blog at:https://financialfreedomisajourney.com/

Analyst’s Disclosure: I am/we are long MA, V. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

GDPPP profile picture
Charles, always enjoy reading your articles. What are your other strongest conviction stocks besides V and MA?
Charles Fournier profile picture

Thank you very much and apologies for the tardy response. I have been away.

rdtuck02 asked me almost the same thing on my VISA: Every Investor....post. He wanted to know what other companies I ranked up there with V and MA. Here is my response to his inquiry.

"Market conditions are definitely not the same as in 2008 - 2010. We need a major correction. In the interim...patience is a virtue.

You can certainly go here to see a list of all the companies in which we own shares.


Many of these stocks are in accounts I do not publicly disclose.
Keep in mind that the current stock prices for these companies are much higher than our average cost and this may not necessarily be the right time to invest in them."

If I had to pick 10 companies then here they are (in no particular order of preference).


My bonus pick is BR (Broadridge)

I am NOT saying these are all "buys" at this juncture. Some of these companies are currently richly valued.

Does this help a bit?
GDPPP profile picture
Yes, it does. Thanks a lot for your response.

Of those you listed above I hold V, MA, MSFT, JNJ and MMM. All of these look overvalued currently and have outperformed SPY since I bought them. Like you, I wouldn't be a buyer of them at today's prices :)
MA and V are my largest holdings. you mentioned China in your article but no mention of when those markets were going to be open to V and MA? I know that it is a work in process, but shouldn't that be a turbo boost to growth if/when it happens?
Charles Fournier profile picture

I hear where you're coming from. It certainly would be a boost to their growth but I have been unable to locate anything definitive as to when that market will open for them. Given this I didn't mention China. Does saying "one day" V and MA may be granted the rights to operate in China add any value?

Waiting for these rights could take.......forever.
horowitzcpa profile picture
Visa's close today makes it a 10X. As Charles states above his (and my) MA is a 2X. Trust....
ChuckXX profile picture
Like the board game "Where's Waldo", I say "Who's Walter Merricks"??? I read your link about the "Class Action 14 Billion Dollar Lawsuit being appealed" and all I can say is what I've said all along from day 1. These European Liberals and Socialists are just looking at different ways to continue their "Socialism Agendas". Its really not even complicated. Like I also have said "No One and I do mean NO ONE" is forcing the public to use their Mastercard or Visa card for that matter. Therefore there is no justification for a lawsuit. No one forces you to pay for something with your credit card. Go down to the damn bank and get cash if you don't want to use your credit card. These Liberals drive a sane man insane.
KeithX profile picture
MA and V and two of our highest conviction stocks too, Charles. Long term growth prospects are great IMO. I guess that I'm lucky to have begun to accumulate shares in early 2013, since MA is just about to double and V has done even better. I bought both stocks because I didn't see a specific advantage one company had over the other.
Sir ,you sound like a genius,I will follow your posts
Charles Fournier profile picture
Gary and Barb,

Thanks very much for the compliment but I'm just trying to use common sense. This is not rocket science.
ValueOverEverything profile picture
It's hard to ignore the valuation metrics here... 37 P/E, 14 P/S, 27 P/B. No thanks on grossly overpaying for a strong company
Random Logic profile picture
It's not hard for me to overlook a 37 P/E when it's generating a 78% ROE with LT growth pegged at 17%. Expensive? Yes. Overpriced? No, not by a long shot.

Long MA
GDPPP profile picture
FCF growth rates are amazing as well as Charles pointed out above.

Long V and MA and planning to hold these 2 for as long as it takes. They have the potential to be the two future dividend aristocrats in the making.
You seriously overlooking tencent.
marriottmare profile picture
2 of my strongest holdings, also!
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