Storm The Castle Stock Of The Day: MasterCard (MA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified MasterCard ( MA) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified MasterCard as such a stock due to the following factors:

  • MA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $442.6 million.
  • MA has traded 1.2 million shares today.
  • MA is trading at 2.28 times the normal volume for the stock at this time of day.
  • MA crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on MA:

MasterCard Incorporated provides transaction processing and other payment-related services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services. The stock currently has a dividend yield of 0.6%. MA has a PE ratio of 27.5. Currently there are 17 analysts that rate MasterCard a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for MasterCard has been 5.3 million shares per day over the past 30 days. MasterCard has a market cap of $82.5 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.76 and a short float of 1.4% with 2.27 days to cover. Shares are down 12.1% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MasterCard as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 16.3%. Since the same quarter one year prior, revenues rose by 14.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MA's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MA has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • MASTERCARD INC has improved earnings per share by 17.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MASTERCARD INC increased its bottom line by earning $2.57 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $2.57).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 13.6% when compared to the same quarter one year prior, going from $766.00 million to $870.00 million.
  • The gross profit margin for MASTERCARD INC is rather high; currently it is at 62.38%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 39.96% significantly outperformed against the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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