Should You Buy Mastercard Stock Now?

Absent a recession, it is almost always a given that a company growing at a fast rate will trade at a premium P/E valuation compared to the S&P 500 as a whole. One of the trickier aspects of investing is trying to figure out when you should pony up and pay the premium anyway (see Nike these past seventeen years) or recognize that the valuation has become so high that it will lead to subpar returns (see Coca-Cola these past seventeen years).

Mastercard is a company that has frequently caught my eye not just for its fast growth, but for the amount of money that can be extracted without threatening the competitive position of the business. The business is truly exceptional–it generates $9.7 billion in revenues and $3.7 billion ends up flowing to the bottom-line as profit. That is a profit-to-revenue ratio of 38%. One of the best businesses in … Read the rest of this article!