The U.S. consumer has been in a funk for several years now. European consumers feel even more pinched. Even the go-go economies of China and Brazil are seeing the signs of weakening consumer sentiment. Still, credit card giants Visa (NYSE: V) and MasterCard (NYSE: MA) have managed to whistle past the graveyard. They've seen their shares soar ever-higher, becoming a "must-own" stock for many mutual funds and hedge funds.
But if you've been on the winning end of the credit card trade, then you need to get out --now. These stocks suddenly look tired and their next move may be down, according to one Wall Street analyst. After digging through these company's fundamentals, I think you'll be hearing about more downgrades in the coming weeks and months.
"We're not banks"
Perhaps the greatest attribute of these stocks is that they carry almost none of the risk other financial-service providers bring. They don't own stocks and bonds, they don't underwrite equity and fixed-income offerings, and they don't hold loans that might go into default. Visa and MasterCard simply take a slice of every financial transaction. And with the world slowly migrating to a "cash-free" environment, these companies have been able to boost sales at a 10%-plus annual clip during the past eight years. In fact, they've never had a down year in terms of revenue growth. And investors have responded in kind.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 22nd, 2014 | John Ransom