Mastercard Inc (MA), American Express Company (AXP): Swipe Your Way to Profits With Visa Inc (V)

The competition

Mastercard Inc (NYSE:MA)  and American Express Company (NYSE:AXP) are Visa’s two largest competitors in the credit card industry. Let’s break down the three companies’ valuations:

Source: Yahoo! Finance.

Visa, Mastercard Inc (NYSE:MA), and American Express Company (NYSE:AXP) are all extremely strong companies, as this comparison shows. MasterCard trades slightly higher than its five-year average price-to-earnings of 24.8, and American Express has exceeded its average of 15.8 much more. This information gives the impression that the underlying stocks are ready for a pullback in order to make a healthy run higher.

With that said, I prefer Visa because of its underperformance year to date and its pullback of over 9.5% from its 52-week high, all while remaining the largest player in the industry. I’d only consider this a bad situation if earnings flatlined or the smaller companies were taking share — neither of which seems likely, given Visa’s strength going forward.

The bottom line

Visa could be a screaming buy at its current price. It has the potential to outperform its industry and the overall market for the remainder of 2013 and beyond. Mastercard Inc (NYSE:MA) and American Express Company (NYSE:AXP) are other ways to play the growth of the industry, but some investors may want to wait for a pullback in those names before considering an investment. Take a look and see if the largest electronic payments company in the world would fit in your portfolio.

The article Swipe Your Way to Profits With Visa Inc originally appeared on Fool.com and is written by Joseph Solitro.

Joseph Solitro owns shares of Visa. The Motley Fool recommends American Express, MasterCard, and Visa. The Motley Fool owns shares of MasterCard and Visa.

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