MA - Chart looks interesting
Mastercard appears oversold, and touching support (but a few points away from the 62 SMA support) within the daily chart:
The weekly chart also indicates a level of support via the 14SMA, that has acted as support before:
MA seems interesting here, at least on the technical front. However, I am still not a big fan of its valuation. A PEG of 1.88 is still a bit rich. Regarding valuation: Yahoo Finance sees about a 16.5% growth for the next five years. I think that is too low. I would use 20%, which brings the PEG to about 1.59. Still a bit rich, but more reasonable. With the use of plastic gaining momentum, this may not be a bad time to make an initial entry.
If you want to be a bottom fisher, than I would wait for around 130 to 140, as there is support around those levels, and valuation would be much more reasonable in relation to the growth for the use of plastic verse cash. (The one thing I really noticed when I was in Iceland a few weeks ago was the tremendous use of credit cards verse cash.)
Seeing how horrible the market is as of late I would not blame anyone for waiting. MA also reports on Wed, and if the numbers do not justify the previous run, MA may take a hit due to its premium valuation.
July 30th, 2007 at 12:17 am
Great analysis Echo. MA has been on my radar for a while, but the point about valuation right now sticks the most. We’ll get a bounce next week sometime, probably a sharp one, but I am not trusting it one bit. Until the credit market isn’t on the front burner, the market is more likely than not going to bounce around to the downside. MA can probably be picked up at lower prices. Again, thanks for posting your analysis.