Analysis: MA V AXP

Action Alerts PLUS holding Mastercard ( MA) delivered their second-quarter earnings today and much like competitor Visa ( V)  , which we discussed in our Alert  here, the company handily beat on the top and bottom lines.
 
Mastercard posted healthy revenue growth of 21% in a very challenging environment. The company said inflationary pressures are increasing but have yet to significantly affect overall consumer spending. The monthly "spending pulse" delivered by Mastercard confirms this notion. Switched transactions, or transaction volume, was up a solid 12% during the quarter. Mastercard makes the bulk of its revenue from fees, therefore a strong correlation to transaction volume and revenue growth.
 
The current state of the economy seems to bode well for Mastercard. From the Fed notes and Chair Jerome Powell's comments, the consumer remains buoyant and continues to spend money. The job market is strong and there are no signs of that changing anytime soon (according to the Fed).
 
We have often noted that MA stock trades within a range of $300-400 and it is currently near the midpoint of that range. We view Mastercard as the premier credit card company in the world as they continue to gain share against tough opponents Visa and American Express ( AXP) .
 
We rate the stock a Two and would suggest subscribers consider buying the stock on any pullback opportunity. Our price target is $425, which translates into solid 24% potential upside from Wednesday's close.