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Buy 'The Donald Dip' In Payments Stocks At Attractive Entry Points

Javier Hasse

Several payments stocks have been suffering since Donald Trump was elected president of the United States. Even after Tuesday’s large rebound, the following stocks are among the declines in the sector since November 9:

  • Global Payments Inc (NYSE: GPN), down 4.0 percent.
  • Mastercard Inc (NYSE: MA), down 0.75 percent.
  • Paypal Holdings Inc (NASDAQ: PYPL), down 4.1 percent.
  • Vantiv Inc (NYSE: VNTV), down 2.4 percent.
  • Visa Inc (NYSE: V), down 1.65 percent.

By contrast, over the same period, the S&P 500 gained 1.45 percent, and the Dow, 2.8 percent.

In a recent report, analysts at Jefferies argued that the weakness in the industry seems to have been largely driven by investor migration into core financial stocks, which experts believe will witness a considerable “rate and regulatory tailwind under a Trump Administration.”

Lookin’ Good

If Trump's plans to de-regulate the financial services industry “ends up including a repeal of the Durbin Amendment and a less-powerful CFPB, this should generally be a tailwind for the Payments industry,” the research note added. However, impacts to PayPal, Square Inc (NYSE: SQ) and merchant acquirers may not be as clear.

There are, nonetheless, some caveats related to debit interchange rates and international exposure.

Notwithstanding, Jefferies analysts concluded, relative valuations in the payments space look very attractive, especially in PayPal and Visa.

Other Moves To Note

While most payments name have tumbled since the election, Planet Payment Inc (NASDAQ: PLPM) has managed to gain 18.8 percent.

Also worth considering, in its latest 13F — for the third quarter of 2016, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) disclosed ownership of $9.7 billion in American Express Company (NYSE: AXP) stock and $873 million in Visa stock after a 3 percent increase in exposure. Also heavily invested in both these payments giants is Ken Fisher’s Fisher Asset Management, which held 10,532,878 American Express shares and 14,764,995 Visa shares as of September 30.

Image Credit: By Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons

Latest Ratings for MA

Date Firm Action From To
Nov 2016 Guggenheim Downgrades Buy Neutral
Oct 2016 Barclays Maintains Equal-Weight
Sep 2016 Barclays Maintains Overweight

View More Analyst Ratings for MA
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