The latest Supreme Court ruling, which makes it harder to try civil antitrust suits, could be good news for Mastercard, Cramer says. American Express and Discover have filed one against MA, and it’s due for court in September. But the high court’s decision should mean it gets dismissed, at least as far as one Harvard Law grad is concerned.
So the one reason not to own the stock is gone, it seems – and it might even be a reason to own it now. The short ratio on Mastercard is 17% because of the lawsuit, but eventually the strength of this stock should force a cover, sending MA even higher.
The rest of the reasons to own MA haven’t changed since Cramer recommended it back on June 19 at $44 and change. The stock’s close to $140 now. Mastercard is still riding high as credit and debit cards replace cash, and the potential for international growth is enormous given the lack of penetration so far. The company is number two in the sector, but gaining share, Cramer says.
Don’t let the fact that Visa is coming public scare you out of owning some either. It’s not like competition is going to come out of nowhere once Visa starts trading.
If you’re looking for a trade, the analyst meeting on May 31 might be the time. If Mastercard increases fees, then Cramer thinks it’s within reason the stock could go 30 points higher on those alone.
Bottom Line: For Cramer, there have been great reasons to buy Mastercard, but there’s also been at least one good reason to stay away – the fear of antitrust litigation. Not any more. Mastercard is a part of a virtual oligopoly and Cramer thinks it’s in the clear right now.