December 6,2011 -By Paul Whitfield
In early August, the credit card and payment-processing stocks moved into the top 20 among IBD’s 197 industry groups.
Since then, the group has remained highly ranked.
If an investor were looking for reasons why the credit card stocks shouldn’t be doing well, you could find them. The world economy doesn’t look so hot. Europe appears headed for a recession. The U.S. economy is questionable. Washington doesn’t trust free markets, even to the point of requiring the Fed to micromanage the fees credit card companies can charge.
But simple logic and expert opinions can lead to missed opportunities. If you trust the weather forecast more than the weather itself, you’ve got it backward.
Ultimately, a strong performance says more than anybody’s opinion.
MasterCard (MA) has a best-possible 99 Composite Rating. Earnings stepped up 24%, 36% and 43% in recent quarters. Revenue growth accelerated from 15% to 22% and 27%. The Sales + Profit Margins + Return On Equity Rating, or SMR, is a best-possible A.
Funds buying shares come from both the growth side (Fidelity Contrafund) to the value side (Berkshire Hathaway).
Visa (V) also has a 99 Composite Rating and an A in SMR Rating. Earnings improved 28%, 30% and 20% in recent quarters. Revenue grew 15%, 14% and 13%.
Funds expanded their stake in the past two quarters.
Cardtronics (CATM) is somewhat thinly traded, but it has a 99 Composite Rating and an A in SMR. Earnings advanced 42%, 31% and 39% in recent quarters. Revenue popped 8%, 11% and 21%.
Alliance Data Systems (ADS) has a 98 Composite Rating and an A in SMR. Earnings jumped 47%, 27% and 39% in recent quarters. Revenue expanded 12%, 11% and 20%.
Each of these stocks are either in or recently emerged from first- or second-stage bases.
With the market in correction, investors should focus on building their primary watch list with stocks from strong industry groups. The Finance-Credit Card-Payment Processing group is one of the stronger market performers.
Credit Card Stocks Lead Market For Months.(2011, December 6). Retrieved from http://news.investors.com/Article/593889/201112061801/credit-card-stocks-top-rated.htm