Visa Inc (V), Mastercard Inc (MA): 3 Compelling Reasons to Buy These Credit Card Stocks

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Pending growth

Visa and MasterCard have been reporting stellar financial performance. There are absolutely no signs pointing toward a slowdown, especially since both of the companies are rapidly deploying their respective mobile-payment systems using Near Field Communication (NFC). Mobile payment systems make retail payments more flexible, easier and safer than credit cards, and should be met with increased credit servicing.

As a strategic move, Visa Inc (NYSE:V) has teamed up with Samsung to ensure a rapid deployment. As per the agreement, Visa’s payWave app will come pre-installed in Samsung’s NFC capable devices, beginning with Samsung Galaxy S4.

MasterCard also recently introduced its mobile payment solution, MasterPass, which is an evolution of PayPass. It should be noted that these payment solutions will be accepted by both retail merchants and financial institutions, which could very well threaten the dominance of eBay Inc (NASDAQ:EBAY)’s PayPal.

These deployments have just begun, and yet a report by ABI Research suggests that nearly 1.95 billion NFC capable devices will be shipped around the globe in 2017 alone. This leaves ample growth potential for both Visa Inc (NYSE:V) and MasterCard.

Wrap up

Both MasterCard and Visa have low yields because their shares have risen by 146% and 179%, respectively, over the last 5 years. Repurchasing shares while companies are delivering spectacular results only displays the faith and confidence of their respective board members. Shares of Visa and Mastercard Inc (NYSE:MA) trade at forward earnings multiples of 18.5x and 17x, which indicates that shares are fairly valued but by no means overvalued. Both Visa Inc (NYSE:V) and MasterCard have their share of positive triggers and thus deserve a buy rating.

The article 3 Compelling Reasons to Buy These Credit Card Stocks originally appeared on Fool.com and is written by Piyush Arora.

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