We're Locking in Big Gains in This Overbought Portfolio Holding
Here's why we're ringing the register — even as we hike our price target.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
MA | Sell | 45 | 566 | 230 | 2.5 |
After you receive this Alert, we will sell 45 shares of Mastercard MA at or near $566. Following the trade, MA shares will account roughly 2.5% of portfolio assets.
We are using the post-earnings strength in Mastercard shares, which led them to close at a new high, to lock in a slice of the more than 30% gain registered since their July lows. We are making this move even as we are boosting our price target to $600 from $570 to reflect the company’s initial 2025 guidance, to reflect the gain in the shares and also their deeper move into overbought territory over the last few days.
We will continue to have exposure to Mastercard as it to attacks the use of cash and checks around the globe, which it estimates at $11 trillion and $1.5 trillion in respective transactions. Helping in that effort, exiting December, Mastercard had 3.5 billion cards issued, up from 3.3 billion exiting 2023 and 3.1 billion at the end of 2022. Should employment and real wage growth prove to be stronger than expected in the coming months, it would give us reason to once again revisit our MA price target.
For the current quarter, Mastercard forecasts revenue to rise in the low-double digits compared to the year-ago quarter, pointing out spending trends for the first three weeks of the quarter support that outlook. We see that supported domestically by more people working and benefiting from real wage growth. Other support comes from favorable travel guidance from airlines and the multiplier effect it has on overall spending. Volume gains and comparatively lower expense growth bode well for incremental margin improvement in the quarter.
With regard to Mastercard’s full-year 2025 guidance that calls for net revenues to grow at the high-end of a range from low double digits to low-teens on a currency-neutral basis, we’ll be closely watching domestic and key market spending data as well as job and disposable income growth. The push-pull between potential Trump tariffs and tax cuts will be a policy pair we watch closely given the potential impact on spending power.
Inside Mastercard, new partnerships with Crypto.com and cryptocurrency wallet MetaMask and how they advance Mastercard’s goal to enable consumers to buy cryptocurrencies on card and spend their crypto balances anywhere that Mastercard is accepted is another development we’ll be keeping tabs on.
As we make this trade, we’ll note that if we see MA pull back to support levels between $515 and $526, which would offer double-digit upside to our new price target, we may consider buying back some shares, subject to our cash levels.
Also of note, because this trade occurs after the January 10 record date for Mastercard’s February 7 payment date for its first quarterly dividend of $0.76 per share, we will receive that payment for all 275 MA shares the portfolio owned before today’s trade.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long MA.
