By any account, 2013 has been a stellar year for shares of payment network MasterCard (MA) -- the $99 billion firm has seen its share price rally more than 68% in the last 12 months. Investors have some big tailwinds to thank for all that upside; and those macro factors aren't showing any signs of dying down as we head into another year.
MasterCard is the second-biggest payment network in the world, with nearly a third of the world's credit and debit cards bearing its logo. Like larger competitor Visa (V), MasterCard is a payment network only - that means that it doesn't carry credit risk on its balance sheet from lending cash to consumers and businesses. MA only facilitates the transaction for a fee, which means that the firm's revenues are tied to global spending volumes, not debt levels. Card networks tend to have a positive feedback loop -- consumers choose MasterCard, for example, because it's accepted nearly universally, and merchants accept MasterCard because of the large numbers of consumers who carry the card. That makes it even more challenging for new competitors to break into the field.
The big macro trend boosting MasterCard is the worldwide shift from cash to electronic payments. Despite the popularity of electronic card payments in countries like the U.S., the vast majority of worldwide transactions are still settled in cash. Because of the extra convenience and security of payment cards, that tide is turning - and MA and its competitors all stand to benefit from the growth.
MasterCard's momentum still looks strong heading into 2014, and that makes this Rocket Stock worth a closer look as we head into a new year.