MasterCard, IBM Lead High-Flying Stocks - TheStreet



) -- Stocks gained yesterday as Abu Dhabi bailed out Dubai's

Nakheel PJSC



(C) - Get Report

announced plans to repay TARP funds, and

Exxon Mobil

(XOM) - Get Report

bid on

XTO Energy

( XTO). These stocks hit 52-week highs.

3. Simon Property Group

(SPG) - Get Report

rose 1.4% to $77.85. The real estate investment trust, which specializes in shopping malls, declared a quarterly dividend of 60 cents a share, payable on Dec. 18.

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: Third-quarter net income dropped 10% to $112 million and earnings per share fell 24% to 38 cents, hurt by a higher share count. Revenue declined 2% to $930 million. Simon Property's gross and operating margins inched up from 42% to 43%. Its net margin decreased from 13% to 12%. The company holds $3.7 billion of cash and $19 billion of debt. Its 3.9 debt-to-equity ratio indicates excessive leverage.

Our take

: We rate Simon Property "hold." The company's falling revenue and profit spreads are obvious negatives. Our model gives the stock a volatility score of 3.6 out of 10, less than the "buy"-list average. The shares have a beta, a measure of market correlation, of 1.8. They tend to rise and fall more than the overall market.

2. MasterCard

(MA) - Get Report

gained 1.5% to $247.48. Last week,


(LAZ) - Get Report

raised its price target for the transaction processor from $250 to $285, citing encouraging data from privately held competitor

First Data

for November.


: MasterCard swung to a third-quarter profit of $452 million, or $3.45 a share, from a loss of $194 million, or $1.48 a share, in the year-earlier period. Revenue rose 2% to $1.4 billion. MasterCard's gross margin widened from 42% to 51%, and its operating margin expanded from 41% to 50%. The company holds $2.9 billion of cash and $22 million of debt.

Our take

: We rate MasterCard "buy." Despite posting losses in the second and third quarters of 2008, MasterCard is an attractive investment. We give the company a financial strength score of 9.9 out of 10 due to its hefty cash reserves and minimal debt. The stock receives a performance score of 8.9 out of 10. Shares have advanced 73% this year, outpacing major U.S. indices.

1. IBM

(IBM) - Get Report

climbed 0.2% to $129.93. The technology consultant is benefitting from a shift into large-cap stocks. Shares have risen 9% over the past three months.


: Third-quarter net income increased 14% to $3.2 billion and earnings per share advanced 17% to $2.40. Revenue dropped 7% to $24 billion. IBM's gross margin stretched from 48% to 50%, and its operating margin increased from 16% to 18%. IBM possesses adequate liquidity, evident in its quick ratio of 1.1. Its 1.4 debt-to-equity ratio is a bit high.

Our take

: We rate IBM "buy." Our model gives IBM a financial strength score of 5.8 out of 10, less than the "buy"-list average. Nevertheless, IBM has boosted earnings per share 18% annually, on average, during the past three years. Its shares have rallied 54% this year, outpacing major U.S. indices. The stock garners a lofty performance score of 8.6 out of 10.

-- Reported by Jake Lynch in Boston.