Mastercard Inc (MA), Visa Inc (V): Which Credit Card Stock Offers the Greatest Potential?

(Visa 2012 Annual Report.) All numbers in billions except cards.

Visa is the largest company out of all three and is positioned to benefit the most from international emerging market growth. MasterCard is currently experiencing higher growth rates in their international markets, but Discover has the most diversified product offering and the most room for growth. Because I believe all three of these companies will be present solid long term growth opportunities, I am going to pick the winner on a cross sectional valuation.

The Bottom Line

My valuation prices were calculated based on if the stock were to trade at its 5 year average valuation. All three stocks are trading significantly higher than their 5 year average valuations, which is the reason the projections are so low. This might not give us an accurate fair value, but it does enable us to see which stock is the cheapest relative to the others. Tihs is Visa. The biggest downside to this valuation is it doesn’t incorporate growth or any future events; it only looks at today and yesterday. But based on historical data and its current valuation, Visa is priced right and also has a strong international presence that makes it a very attractive stock with great future growth opportunity.

The article Which Credit Card Stock Offers the Greatest Potential? originally appeared on Fool.com and is written by John Kolb.

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