One Final Purchase
Friday is typically my day for the “Week in Review Post” and it seems I’m now going to skip it twice. I think the flurry of buying this week probably is enough of a commentary on what I think about the markets over the last few weeks. And, hopefully, reading my thoughts on particular stock picks has been a welcome change of pace for a blog which is typically less stock picking oriented and more educational.
Yesterday’s end of day movement in Mastercard (MA) was the signal I’ve been waiting for. When Mastercard surged with the rate cut last week, I did everything I could to hold off and wait for a pull back. As expected, it pulled back over the ensuing week and I’ve since been eagerly waiting the opportunity to buy into the next rally. Yesterday, we saw the stock open flat, trade down as selling pressure waned, and surge on volume in the last hours of the day which sounds to me like the buyers are back on board. (For those of you more tepid than I, might I suggest waiting for the price to push north of 150 with an accompanied move in RSI above that of its most recent high.)
I’ve liked this stock for a while and am glad to have the opportunity to buy it at such a discount from its old highs. I am confident that this stock is poised to reclaim its highs from before the August correction. Recent precedent shows that there is attainable pricing in the 170 range which represent an easy 15% and who knows where we go from there.
Mastercard maintains a strong brand and its payment systems network is unparalleled by any one in the world with the exception of maybe Visa. Strong brand, nearly impenetrable stature in the industry, and trading at a discount to recent market valuations as a result of only beating analyst estimates by 6.7% (haha). Sounds like just the opportunity I’ve been looking for for Portfolio B, and, you guessed it, that is where this position lies. The allocation of new money in Portfolio B is now complete and we have a full complement of investments in such names as Southwest, J. Crew, Aetna, and Mastercard. No, they’re not value names, but they are stocks picked up at very reasonable prices all of whom have demonstrated tremendous earnings, and the potential for more, over the last year.
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Comments
Mastercard is a global brand offering an unparalleled payment processing services. Yes, a slow down in consumer spending here in the United States could hurt some of its business, but the global growth story is not over and Mastercard is a smart play in the long run on that. I would prefer the stock make quick work to new highs, but with stories like these I’m willing to be patient. A year ago, when I identified Garmin (for different reasons) but as a similar kind of story, I sold out after reaping an easy 20%. Now, the stock is up nearly three times my selling price. Let’s hope we’ve got the next Garmin right here.
I climbed aboard the MA bandwagon and looking into cash in about a 15% profit and definitely thing the $170 strike price is doable ideally by the beginning of November. MA does look like a great choice despite the current credit crunch issues. I am interested to finding out what do you think the effect would be on strike price if poor sales reports come out for the month of September? Do you forsee price of stock taking a momentary hit?