The U.S. economy is currently experiencing stagflation, a combination of high inflation and slowing GDP growth. In this challenging investing landscape, Mastercard stock has emerged as a sudden must-have for investors [dd4ab807]. Despite recent legal changes that have impacted interchange fees for Mastercard and Visa, Mastercard remains resilient due to its increasing transaction volumes and growing macro trends. Institutions have invested $347 billion into Mastercard this year, recognizing its growth rates that surpass peers and the rest of the industry [dd4ab807]. Analysts project that Mastercard stock could rally by as much as 13% from its current price, with a price target of $520. Mastercard's EPS growth is expected to outpace Visa's, and the stock is valued at a premium compared to its peers [dd4ab807].
Stagflation is a challenging economic phenomenon characterized by high inflation and stagnant economic growth. As the U.S. economy falls into stagflation, investors are seeking investments that can outperform in this environment. Mastercard stock has become a must-have due to its strong performance and growth potential. Despite the legal changes impacting interchange fees, Mastercard's transaction volumes continue to increase, and the company is well-positioned to benefit from macro trends [dd4ab807]. The article highlights that institutions have invested $347 billion into Mastercard this year, recognizing its growth rates that surpass peers and the rest of the industry [dd4ab807]. Analysts expect Mastercard stock to rally by as much as 13% from its current price, with a price target of $520. Mastercard's EPS growth is projected to be higher than Visa's, and the stock is valued at a premium compared to its peers [dd4ab807]. Mastercard's sudden must-have status makes it an undeniable addition to investors' watchlists during this new cycle [dd4ab807].
Mastercard, a major global company facilitating $10 trillion in payments annually, is perceived by most investors as a cash-to-card play. However, its future success relies on new flows and value-added services. Mastercard's strong growth trajectory and low valuation make it a compelling investment with potential for market-beating returns [6fba31cd]. The company's revenue is driven by its core consumer payments business, as well as new flows and value-added services. New flows include transactions that are not regular consumer-to-merchant, and value-added services encompass a range of solutions across fraud, data, analytics, marketing, and more. Mastercard's revenues are also influenced by client incentives, which are paid to card issuers to incentivize them to use Mastercard's network. The company's growth and stock performance are becoming increasingly dependent on its new businesses. Mastercard is currently trading at a historically low valuation, and its multiples are 15% below their 5-year average. Despite challenges such as regulatory issues and competition, Mastercard is considered one of the strongest double-digit growth stories in the market [6fba31cd].
Mastercard's strong Q2 earnings report further supports its growth trajectory. Global purchase volume at Mastercard reached $1.97 trillion in Q2, driven by healthy consumer spending. CEO Michael Miebach attributes the double-digit revenue and profit growth to the robust consumer spending [26bfd55e]. Despite risks to consumer spending in the US, Mastercard remains positive about its growth outlook. Consumers are empowered by having more data and the ability to look for better deals, which contributes to their continued spending. Cross-border volume also grew by 17% year-over-year, indicating strong international consumer activity. However, US sentiment remains guarded due to inflation and uncertainty about the presidential election [26bfd55e].
Overall, Mastercard's strong Q2 earnings and its ability to navigate the challenging economic landscape make it an attractive investment option. The company's focus on new flows and value-added services, along with its low valuation, positions it for potential market-beating returns. With healthy consumer spending and positive growth outlook, Mastercard continues to be a must-have stock for investors [26bfd55e].