2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 131
In 2023, Mastercard Incorporated (NYSE:MA), one of the Best Financial Stocks, processed about $9 trillion in transactions, making it the second-largest payment processor globally. The business maintains excellent operating margins, benefits from increased travel, and excels at digital and cross-border payments. The firm processes transactions in more than 150 currencies and has operations in more than 200 countries.
Despite inflation and market challenges, the company has shown strong growth and profitability. Although competition and regulatory scrutiny are risks, Mastercard Incorporated (NYSE:MA) is well-positioned for future growth due to its innovative and strategic investments.
Mastercard Incorporated (NYSE:MA)’s sustainability can be seen in recent financial results. In Q3 of 2024, strong consumer spending and better global macroeconomic conditions drove a 13% YoY growth in revenue. The 10% YoY growth in gross dollar volume and the 17% YoY increase in cross-border volumes point to travel-related and overall spending still being on the rise. Revenue from value-added services increased by 18%, outpacing overall growth, while operating margins increased to 59.3%, resulting in a 16% increase in EPS. The firm continues to provide strong shareholder returns, as seen by its $12 billion authorization for a new share buyback and its $12 billion annual free cash flow. Operating cash flow increased by 58.86% YoY.
James Faucette, an analyst at Morgan Stanley, increased the price objective from $564 to $654 on Mastercard Incorporated (NYSE:MA). According to the company’s 2025 forecast statement, its attractive payments and processing market picture is predicated on a number of factors, including a demand for more M&A, quicker investment in competitive strengths, younger consumer preferences, improved investor optimism, and lessened regulatory scrutiny.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the firm among the funds in Insider Monkey’s database. It owns 4.12 million shares worth $2.03 billion as of Q3.
Montaka Global Investments stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q3 2024 investor letter:
“Montaka owns several duopolists in the financial services industry, including Visa and Mastercard Incorporated (NYSE:MA) in payments; and S&P Global in credit ratings and financial data services. These businesses have competitively protected and reliably growing core businesses. But they also have newer, high-probability adjacent opportunities. The market, however, is underappreciating this powerful combination, in our view.
For Visa and Mastercard, their core businesses in global payment processing are being complemented by significant growth in two areas: New processing opportunities in peer-to-peer, business-to-business, business-to-consumer, and government-to-consumer payments; and Value-added services, including risk, fraud-detection, issuance, acceptance, and open banking.”