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MasterCard, Visa Lead High-Flying Stocks

Western Digital Corp., MasterCard and Visa hit 52-week highs on Friday.
Author:

BOSTON (

TheStreet

) -- The tech-heavy

Nasdaq Composite

rose 1.5%, leading major benchmarks on Friday. Here are three stocks that hit 52-week highs.

3. Western Digital Corp.

(WDC) - Get Report

rose 1.9% to $42.79. On Thursday, the hard-drive maker announced a collaborative effort with Tokyo's

NEC Electronics

to promote SuperSpeed USB 3.0, a new external storage product.

The numbers

: Fiscal first-quarter net income increased 36% to $288 million and earnings per share advanced 34% to $1.25, restrained by a higher share count. Revenue ascended 5% to $2.2 billion. Western Digital's gross margin expanded from 26% to 29%, and its operating margin stretched from 11% to 14%. The company has a stable financial position, with $2 billion of cash and $463 million of debt.

The stock

: We rate Western Digital "buy." The stock is cheaper than the average computer and peripheral maker based on all of our valuation measures. Although sales and profit dropped during Western Digital's 2009 fiscal year, revenue has increased 18% annually, on average, during the past three yeras. Net income has risen 8% a year during that time. The stock has almost quadrupled this year, meriting a performance score of 9.1 out of 10.

2. MasterCard

(MA) - Get Report

jumped 2.9% to $254.84. The transaction processor's shares rallied on positive fiscal fourth-quarter results from competitor

TST Recommends

Discover

(DFS) - Get Report

, which reported on Thursday.

The numbers

: 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 inched up 2% to $1.4 billion. MasterCard's gross margin expanded from 42% to 51%, and its operating margin widened from 41% to 50%. The company has $2.9 billion of cash and $22 million of debt.

The stock

: We rate MasterCard "buy." It has impressive three-year annualized growth rates of 16% for revenue and 225% for net income. Although fiscal 2008 included two unprofitable quarters, the company has rebounded impressively from the recession. We give MasterCard a financial strength score of 9.9 out of 10. The stock has risen 78% this year, more than major U.S. indices.

1. Visa

(V) - Get Report

climbed 2.2% to $88.97. Like those of MasterCard, the transaction processor's shares benefitted from the announcement of Discover's strong quarter. In addition, the company was added to the

S&P 500

, so money managers tracking that index purchased its shares.

The numbers

: Visa swung to a fiscal fourth-quarter profit of $514 million, or 49 cents a share, from a loss of $356 million, or 42 cents a share, in the year-earlier period. Revenue increased 10% to $1.9 billion. Visa's gross margin improved from 49% to 51%, and its operating margin rose from 46% to 48%. The company has a liquid balance sheet, with $6.9 billion of cash and just $56 million of debt.

The stock

: We rate Visa "hold." Our model is less optimistic about Visa than other credit-card companies. We give Visa a growth score of 3.5 out of 10 and a performance score of 4.2 out of 10. Both figures trail their "buy"-list averages and Mastercard's tallies. The stock has advanced 70% this year, beating major U.S. indices. Shares are more expensive than those of the average IT services peer based on earnings, sales and cash flow.

-- Reported by Jake Lynch in Boston.