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MasterCard (MA) Shares Have Outperformed Some Wall Street Bigwigs: How Can Investors Play This?

Christopher Vargas

MasterCard MA shares have gained more than 46.2% in 2019, significantly outpacing the S&P 500’s 17.9% rise thus far. The company has also soared 977.5% since the start of the decade dwarfing the S&P 500’s 174.5% gain. MasterCard has also outperformed FAANG—Facebook FB, Amazon AMZN, Apple AAPL, Netflix NFLX, Google GOOGL—stocks in 2019 as well. Morgan Stanley MS analysts attribute the outperformance to improving computing power, larger scale, secular growth drivers and resilient consumer spend trends.

The financial services company has benefitted from the longest economic expansion period in US history, as well as the consumer preference shift from cash to card. A robust economic expansion encourages consumers to spend more, boosting fee income for MasterCard and other payment processing companies like Visa V and Fiserv FISV.

Overall, consumer spending, which accounts for more than two-thirds of US economic activity, increased in July despite the ongoing trade dispute between the US and China. Let’s take a look at a few other stocks within the sector that can also bring solid returns to investors.

Fiserv provides information management systems and services to the financial and insurance industries. The stock has risen 44.3% YTD, outpacing the business service market’s 25.2% gain. Over the past ten years, FISV has soared 775.2%, leaving the S&P 500’s 183.7% gain in the dust. The company’s growth trajectory looks solid as consensus estimates project Fiserv’s bottom line to jump 24% to $0.93 per share and revenue to surge 168.51% to $3.79 billion in Q3. Earning trends also look solid; earnings are seeing higher revisions over the past 90 days, giving it a Zacks Rank #1 (Strong Buy).

FleetCor TechnologiesFLT is another financial transaction company that has been on a roll in 2019. FLT provides fuel cards and workforce payment products and services. Their customers include businesses, commercial fleets, oil companies, petroleum marketers and governments in America, Netherlands, Belgium, and other countries. The company’s shares have risen 55.4% in 2019 and has made a habit out of beating our earnings estimates with an average EPS surprise of 1.75% over the past four quarters. Q3 estimates call for bottom-line growth of 13.43% to $3.04 per share on top of a top-line jump of 9.73% to $679.9 million. The stock has a Zacks ESP of 1.38% as it has seen positive earnings estimate revisions giving it a Zacks Rank #2 (Buy).

Visa shares have rallied 33.5% in 2019 and is a leader in the financial transaction industry. The company is a global payment technology company that connects consumers, businesses, banks, and governments, enabling them to use digital currency instead of cash and checks. Visa’s bottom line is forecasted to increase 18.18% to $1.43 per share and for net sales grow by 11.83% to $6.08 billion in the current quarter. The financial company also boasts a 3.37% average EPS surprise over the past four quarters. The company’s dividend has grown steadily over the past five years, which provides further stability for investors looking to get in on the digital and cashless payment trend. Visa sports a Zacks Rank #2 (Buy).

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