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Mastercard: Making A Call On 2020

May 05, 2020 12:37 PM ETMastercard Incorporated (MA)14 Comments


  • With the huge economic impacts of COVID-19, the price of the stock now reflects far less than perfection.
  • While Q1 2020 would have shown continued reliable growth, March was weak thanks to COVID-19, and Q2 will likely be the bottom in terms of volumes.
  • Let the market come down, and take MA under $250, then do some buying.
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Prepared by Tara, Senior Analyst at BAD BEAT Investing

Make no mistake, Mastercard (NYSE:NYSE:MA) continues to deliver solid performance, and in our opinion, this stock remains a buy, especially after its sizable pullback in the COVID-19 crisis. Sure, there will be reduced volumes, less consumer spending, and a slowdown in growth in the next two quarters. The market priced that in with a 100-point drop from the top. Recently, shares started rebounding with the broader market. We think the market is set to continue pulling back in the coming weeks and if you can get into shares under $250, it makes for a solid long-term investment.

Yes, right now, it is painful relative to the growth path the stock and company were on. Yes, valuation-wise, the stock has long been overvalued, but that valuation has come in lower, particularly if we 'exclude' the earnings impacts over the next few quarters and look to 2021. On the next big pullback, we think this stock still makes an excellent addition to any portfolio focused on growth. Of course, it must be stated that the name has been priced for continued near-perfect performance of the underlying company.

As we will see in a moment, with the huge economic impacts of COVID-19, the price of the stock now reflects far less than perfection. Some will say, it is still overvalued. Perhaps. But let us face facts. For years, the argument of the name being overvalued has been made, but shares continue to rise. Despite the pain, we will feel economically in the next few months, maybe even a year, Mastercard as a company has continued to invest in itself.

Will growth return? We believe that it is only a matter of time, and if this market does as we expect it to do, growth will return from

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This article was written by

Quad 7 Capital profile picture

Quad 7 Capital is a team of 12 with a wide range of experience sharing investment opportunities for nearly 7 years. Quad 7 Capital as a whole has expertise in business, policy, economics, mathematics, game theory, and the sciences. They share both long and short trades and invest personally in the stocks they discuss within their investing group. They lead the investing group Bad Beat Investing include: daily market commentary and market briefing, 1-2 trade ideas per week, 5 chat rooms for a range of sectors, volatility screeners, unusual options activity alerts, and economic calendars.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). 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 (14)

TechSales profile picture
Many businesses in GA now aren’t accepting cash with Covid nonsense. Good for MA & V. Do I think it’s stupid, yes. But it does continue the trend of bye bye cash. Long MA and V.
ShankaSwingTrades profile picture
MA and V make all the money
Pay pal and SQ get all the hype
Don't believe the hype.
Buy the moat
Librarian Capital profile picture
The interpretation of "continued investment in strategic initiatives as well as normal operational growth expenses resulted in the expense trend moving higher" is wrong.

Of the 8% currency-neutral expense growth in 20Q1, a net 3% comes non-organic items, including a 6% increase from acquisitions offset by a 3% benefit in hedging gains/losses.
@Quad 7 Capital ,
"Let the market come down, and take MA under $250, then do some buying."

You are little bit late with your article! Don't you think so?
when reality sets in, we will find the bottom
MA now $281.10. We are not going to see MA at $250 ever!
Loaded up at $210 in March. Couldn't pass it up.
Justin Kelso profile picture
Got in at 219
Justin Kelso profile picture
Very upset I didn’t buy more but isn’t that always the case. I’m hoping the author is right and we see 250 again but I’m
Just not sure. I guess no one is
I missed GOOGL under $1,050. Might get another chance after next earnings report and the effect of 30 million unemployed and reduced ad spend hits the markets. MCD looked good at $125 in March as I believe (and I could be wrong) if any restaurant can prosper post Covid-19 it will be MCD. Large scale and geared for drive through and take-out business.
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