- MA and V have low volatility and minimal difference between one another.
- American consumers spent $720 billion dollars on credit cards in the second quarter of 2017.
- Credit card delinquency is at an all time low.
MA and V offer mature stocks’ low risk with emerging market growth.
Over the last couple months, the market has climbed to, and stabilized, at an all-time high. As whenever the market reaches a stabilized period after a new record high, voices in the bearish camp grow louder and speak with more frequency. While investors should consider the arguments from both the bullish and bearish campers, there are two positions the pessimistic and optimistic investor should long: Mastercard Incorporated (NYSE: MA) and Visa Inc. (NYSE:V).
A plethora of sources show two things critical to Mastercard and Visa: people are using less cash and cash is still involved in 85% of transactions are moving in their favor. Most investors think of Visa and Mastercard as mature companies and mature stocks; they both pay dividends. I see another side of these two transaction giants. The side is emerging market penetration and saturation. As the developing world transitions from cash transaction to digital transactions, Mastercard and Visa has both the capital and experience to capture that growth.
Investors know the advantages and rewards that wait for them in properly targeted growth stocks in developing economies. They also know the risks of backing the wrong horse in an emerging market. Mastercard and Visa offer a rare dichotomy of maturity and advantageous positioning to reap rewards from developing nations.
Though, there is a reasonable question to ask; is there any value left at Mastercard and Visa’s all-time high share price ?
The short answer is yes; but you shouldn’t just listen to me, the economic indicators and math support longing these two powerhouses.
The first mathematical approach we can look at is pairs trading, which is basically a modeling approach where we use the closing adjusted price of Mastercard to compute a modeled price for Visa, and vice versa.
