Mastercard & Visa - a longterm trade (BUY/ M - 300/ V - 200)

MasterCard and Visa are the two predominant companies with a duopoly in the debit-card space at a global level.


165.3 + 98.3 + 90.2 + 15= 368.8 billion in global transactions.

Visa marketshare; 165.3/368.8= 44.8%
Mastercard marketshare; 90.2/368.8=24.7%
UnionPay marketshare; 98.3/368.8= 26.6%

It is important to note that UnionPay has its biggest customer base within Mainland China, thus skewing the data and not being totally representable at a global level due to its outlier status.

A quick look at their respective charts since 2010 shows their impressive growth-rates versus the SP500.

Mastercard


Visa

Quoting the World Payments Report's Key findings in 2018, conducted by BNP Paribas & Capgemini the various growth rate for non-cash-transactions in various regions of the world are as follows;


Entire report
https://worldpaymentsreport.com/wp-content/uploads/sites/5/2018/10/World-Payments-Report-2018.pdf

Since the world is moving away from cash-payments into electronics payments, Visa and Mastercard have substantially more room to grow, which is also reflected in the their estimates of EBITDA for the ensuing years;





Both companies have a small dividend yield and trade at high P/E ratios in respect to each other, which is adequately priced given their explosive growth and increasing encroachment into the cash-transaction space. 

P/E =  47.1x -  Mastercard
P/E  = 35.3x -  Visa

I would therefore set a target price of 300$ for Mastercard and 200$ for Visa until the end of the year (Q4 2019*).

Profiting strategies on the future developments surrounding the stocks are numerous;

1. Purchasing a deep-in-the-money call-options with a strike at 250$ for Mastercard and 160$ for Visa, (with an expiry 1-1.5 years in to the future*) would offer substantial leverage. Basically entering a synthetic-long-stock position. 

2. Purchasing the stocks themselves.