MasterCard Charges Higher Ahead Of Earnings

Traders on a buying spree seem to be grabbing for MasterCard .

We mean that literally. Shares surged on Monday after Barron’s said MasterCard appears to be a relative value when compared with rival Visa.

Specifically, MasterCard trades at 15 times earnings, but “JPMorgan analyst Tien-tsin Huang argues that Mastercard merits at least a 16 times P/E multiple,” the paper writes.

That compares to Visa which trades at a 19 P/E ratio.

Also, "recovery or no, the payment-processing industry's year-over-year comparisons will start looking better in the December quarter," Barron's says.

As a result, “a swelling chorus on Wall Street say MasterCard is underrated and may be the better play in an economic recovery,” with Mastercard shares having the potential to “go above $200.”

Considering both MasterCard and Visa report their June-quarter results this week -- Visa on Wednesday and MasterCard on Thursday – how should you trade?

With the payment processing business continuing to grow, I like both MasterCard and Visa for the long-term, says Joe Terranova. Take your pick.

At this price I think Mastercard looks expensive, counters Karen Finerman. I like Visa over MasterCard but I wouldn't run into either.

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Trader disclosure: On July 27th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (POT), (AA), (BAC), (AAPL), (FXI), (SBUX); Seymour's Firm Is Short (PBR); Najarian Owns (UNH) Calls; Najarian Owns (BTU) Calls; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (V) & (V) Short Calls; Najarian Owns (WNR); Najarian Owns (YHOO) Call Spread; Terranova Owns (MCD), (AMZN), (MSFT); Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (TBT), (WMT); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (USO), (IJR), (IYR), (IWM), (MDY), (SPY)