Wednesday, January 17, 2007


No this is not a post about my credit card. It's a post about the company and its stock and why MA looks good to me for a long term bullish call play.

Technically, the chart looks extremely bullish and new highs have been the news of late. Would I like an entry at a lower price? Yes. Might it happen? Yes. Will I buy then as well? Yes. Why now? Because like many of my other plays so far, I think it's a runner both on price and IV into earnings and beyond.

What about option pricing? I scaled into the JUL 105 Calls today at 12.11. The FTV is close to 16.00 for these calls and the IV for these calls is currently at 37.6% (52 wk lows).

MA's earnings release is scheduled for 2/9/07 and though Morningstar analysts think its fair value is at 105 other analysts still see the 115-120 range as reasonable, foreseeable, targetable (sorry about all the "ables").

Bulls say leading brand in global payment industry (about 31% of world's credit cards 2nd behind Visa), huge barrier to entry for competitors, and plenty of growth potential for its own processing network which would increase its margins.
Bears say too many anticompetitive lawsuits looming, decreasing merchant fees, too much processing revenue shared with rivals and losing market share to AMEX and VISA.

Finally, if I had to choose between VISA, AMEX, Discover, and Mastercard as a growth play in the stock, I'd choose MA because: A. Visa is not publicly-traded B. AMEX is a value play C. Discover is part of Morgan Stanley for now.

Grab a vine and tell me your thoughts on MA.

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