We recently published a list of 12 Best Quality Stocks to Invest in Now. In this article, we are going to take a look at where Mastercard Incorporated (NYSE:MA) stands against other best quality stocks to invest in now.
Tom Lee, co-founder of Fundstrat Global Advisors, believes that a significant rebound is in the offing, despite the tough start to the year. The strategist opines that there is a possibility of ~10% – 15% bounce over the coming months. In an interview with CNBC, he stated his expectations about March, April, and May witnessing the rally. Therefore, missing critical trading days can be a mistake for investors.
What Lies Ahead?
Lee believes that investors can consider buying as the markets are unsettled. In an interview with CNBC, he went on to explain that the market’s 10 best days last year resulted in the addition of up to 20 percentage points for the broader S&P 500. However, if we exclude these 10 days, the index increased by only 4%. According to him, the best days might be around the corner. If there are tensions related to the growth or related to the employment market, Trump or the US Fed can intervene to bring some stability. These are the favourable catalysts for the upcoming weeks, says Lee. Overall, he believes that a large chunk of the bad news has been priced in as markets have seen a significant decline.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Signs of Economic Strength Remain
Morningstar, while echoing the views of Adam Hetts (Janus Henderson Investors portfolio manager), mentioned that the longer-term perspective is expected to provide investors a silver lining. Hetts believes that there are bright spots in the international markets such as Europe and China, that have surpassed the performance of the US stocks since the beginning of the year. Even though the mega-cap tech stocks have been declining, they are getting cheaper as compared with the elevated valuations just a few months ago.
According to experts, there are several signs of economic strength. Gus Faucher, chief economist for PNC Financial Services Group, told Morningstar that consumers continue to spend amidst weakness in the sentiment data. Also, the labor market has been holding up. Overall, the chief economist doesn’t see any sort of fundamental weaknesses in the broader economy that can signal a problem. As per Morningstar chief US market strategist David Sekera, the investors are required to focus on the fundamentals and valuations, while maintaining a long-term view.
Our Methodology
To list the 12 Best Quality Stocks to Invest in Now, we sifted through the holdings of iShares MSCI USA Quality Factor ETF. Next, we chose the stocks that are popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A woman using a payment terminal at the checkout of a store showing payment products and solutions.
Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 151
Mastercard Incorporated (NYSE:MA) offers transaction processing and other payment-related products and services in the US and internationally. Morgan Stanley analyst James Faucette maintained a “Buy” rating on the company’s stock, setting a price objective of $644.00. The analyst’s rating is backed by factors, which mainly focus on the company’s strategic expansion in the Value-Added Services (VAS) segment. This segment, which consists of security solutions, continues to witness significant growth. Furthermore, Mastercard Incorporated (NYSE:MA)’s recent acquisitions, including Brighterion, Recorded Future, Ekata, and RiskRecon, cemented its capabilities in AI, digital identity verification, threat intelligence, and cybersecurity.
The analyst believes that such acquisitions are expected to enhance Mastercard Incorporated (NYSE:MA)’s ability to offer comprehensive security solutions, which remain crucial in the current digital landscape. Overall, its focus on integrating such services throughout the transaction lifecycle places it well for future growth. Elsewhere, Tigress Financial Partners maintained a “Strong Buy” rating on Mastercard Incorporated (NYSE:MA)’s stock, raising the price objective to $685. The firm lauded its robust market position and innovations in electronic payments and cybersecurity.
Bretton Capital Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Visa and Mastercard Incorporated (NYSE:MA) kept doing their thing, increasing earnings per share by 15% and 12%, respectively, with their stocks returning 22% and 24%. We continue to closely watch the evolving payments space as it seems like everyone’s always trying to displace the card networks. For now, we don’t see anything gaining much traction.”
Overall, MA ranks 7th on our list of best quality stocks to invest in now. While we acknowledge the potential of MA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.