We recently published a list of 10 Best Financial Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Mastercard Incorporated (NYSE:MA) stands against other best financial stocks to invest in.
Financial stocks had a great run in 2024, jumping over 30% by mid-December and outpacing the broader market. Fidelity noted that concerns about bank failures faded as the economy stayed strong, and improving fundamentals kept the sector on track. With the Fed cutting rates for the first time since the pandemic, lower borrowing costs could boost economic activity, even if they squeeze bank profit margins a bit. There are still risks, like commercial real estate exposure and loan defaults, but the post-election landscape looks favorable, with lighter regulations and more deal-making. Heading into 2025, financial stocks have solid momentum and plenty of tailwinds. This shift is creating fresh opportunities across the financial sector, from capital markets to private credit.
According to Morgan Stanley, capital markets are making a big comeback in 2025, strengthened by lower interest rates, easing inflation, and steady economic growth. After a period of uncertainty, companies and investors are finally feeling confident enough to jump back into mergers, acquisitions, and major spending. With more cash flowing into the market, demand for private credit and infrastructure investments, especially in AI, is on the rise. Private credit is also having a moment, offering companies more flexible financing options. It is growing fast, with assets under management expected to double in the next few years. Many businesses are using private markets to refinance debt and fuel expansion. 2025 is shaping up to be a huge year for strategic deals, leveraged buyouts, and capital raising.
Mergers and acquisitions in financial services are set to stay strong in 2025. After a year of big-money deals in 2024, companies are still looking for ways to grow, stay competitive, and adapt to market shifts. While economic uncertainty and geopolitical tensions remain, financial firms are using M&A to keep up with new technologies, changing customer expectations, and regulatory changes. Many banks and financial institutions are eyeing fintech acquisitions to stay ahead in the digital space while selling off underperforming parts of their business to free up capital for high-growth opportunities. Larger deals are becoming more common, especially as potential financial deregulation in the US could shake up global markets.
Some of the wealthiest billionaires have built some of the world’s largest financial firms or continue to hold major ownership positions in them. These companies specialize in asset management, financial data services, and cryptocurrency trading. Take Warren Buffett, for instance. Investors around the world look to his portfolio for guidance. His investment strategy heavily favors financial stocks, with significant holdings in banks, payment technology firms, and insurance companies. By the end of 2024, he had committed over $100 billion to the financial sector, representing a substantial share of his estimated $267 billion portfolio. Like Buffett, there are lots of billionaire portfolios to watch out for. So, let’s dive into the best financial stocks that Wall Street moguls are backing.
A trader on the floor of a bank’s trading room, surrounded by sophisticated electronic equipment.
Our Methodology
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 10 companies operating in the financial services industry with the highest number of billionaire investors in Q4 of 2024. The stocks are ranked in ascending order based on the number of billionaire investors.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Mastercard Incorporated (NYSE:MA)
Number of Billionaire Investors: 22
American multinational payment technology giant, Mastercard Incorporated (NYSE:MA), is part of 22 billionaire portfolios, placing it 2nd on our list of the best financial stocks. On January 31, Citi analyst Ashwin Shirvaikar raised MasterCard’s price target to $650 from $584 while keeping a Buy rating on the shares. After strong Q1 results, the stock jumped 3%, beating the broader market. Shirvaikar believes the company is well-positioned for future growth, despite some short-term challenges. While earnings per share may grow at a slower pace this year, he sees the company as a steady long-term winner in digital payments.
On March 17, Mastercard Incorporated (NYSE:MA) disclosed a partnership with ICBA Payments to enhance card services for 1,400 community banks, introducing contactless payments, digital wallets, and 8-digit BINs. As part of the deal, the company will manage communications and provide joint marketing support while ICBA Payments transitions its programs at no cost.
In Q4 2024, Mastercard Incorporated (NYSE:MA) reported a net income of $3.3 billion and earnings per share of $3.64. Revenue climbed 14% year-over-year to $7.5 billion, while gross dollar volume grew by 12% and purchase volume by 13%. By the end of 2024, there were 3.5 billion Mastercard and Maestro-branded cards in circulation. In Q4, the company bought back 6.5 million shares for $3.4 billion and paid $606 million in dividends.
On February 10, Mastercard Incorporated (NYSE:MA) declared a $0.76 per share quarterly dividend, in line with previous. The dividend is payable on May 9, to shareholders listed by April 9. The company has consistently shelled out dividends since 2007.
Overall, MA ranks 2nd on our list of the best financial stocks to buy according to billionaires. While we acknowledge the potential of MA to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
