Visa Inc (V), Mastercard Inc (MA): Is It Time to Sell These Two Wall Street Favorites?

There is one more area to explore, and that is consumer sentiment and delinquency rates. Naturally, as consumer sentiment rises, as does spending, and consumer sentiment has been on the rise. Moreover, recent data shows that delinquency rates on bank issued credit cards are at their lowest levels since 1990; showing that consumers are better positioned to make their payments.

To me, dropping delinquencies is the wildcard, a catalyst that could boost volume significantly. Yet, still, I can not justify an investment when high single digit, low double digit, growth is all that’s expected. I simply do not believe that either MasterCard or Visa Inc (NYSE:V) are worthy of such a high premium relative to American Express (2.8 times sales) or Discover Financial (3.5 times sales).

Final Thoughts

MasterCard and Visa Inc (NYSE:V) have emerged as Wall Street favorites, but others such as Discover or American Express are presented to the same catalysts that Wall Street finds so lucrative for its two favorites. Hence, while Visa and Mastercard Inc (NYSE:MA) do continue to create new all-time highs, I believe I would begin the process of reassessing the investment and possibly taking profits off the table.

The article Is It Time to Sell These 2 Wall Street Favorites? originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends MasterCard and Visa. The Motley Fool owns shares of MasterCard. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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