Visa and Mastercard, the two largest credit card processing firms, climbed to all-time highs Monday and are in buy zones.
Visa stock topped a 366.54 buy point identified by IBD MarketSurge pattern recognition; shares are up 0.9% to 368.33. More than a week ago, the Dow Jones giant cleared an entry at 351.85 from what could be interpreted as a double-bottom base.
The relative strength line is near new highs, a positive element of the chart. Visa's Composite Rating is 96.
Visa stock fell to its 200-day moving average on April 7 after sweeping tariffs put a chill on Wall Street. But shares bounced back along with the market. IBD Leaderboard added the Dow component to its portfolio Monday.
The payment-processing giant on April 29 beat March-quarter adjusted earnings of $2.76 per share on a 9% increase in revenue to $9.59 billion. Payments volume rose 8% for the quarter, which also beat views. Processed transactions rose 9%.
Perhaps more surprising was the firm's outlook on consumer spending, which CEO Ryan McInerney called "resilient, even with macroeconomic uncertainty."
Mastercard Also At New Highs
Mastercard, meanwhile, is 1% above a 582.23 buy point as shares edged up 0.6% to 586.17 Monday afternoon. Shares poked above the buy point on Friday. Similar to Visa's chart, Mastercard topped a lower entry at 561.83 from a double-bottom pattern earlier this month.
Mastercard stock's relative strength line also is near new highs, reflecting its outperformance vs. the S&P 500. Its Composite Rating is 96.
On May 1, Mastercard reported a 20% increase in earnings to $3.82 per share on 14% revenue growth to $7.49 billion. The results topped analysts' expectations.
Gross dollar volume rose 12% for the quarter, while purchase volume rose 13%. Mastercard's switched transactions — which include authorization, clearing and settlement transactions — increased 11% from last year.
Those numbers show that consumer spending cutbacks are "not manifesting themselves quite yet" in spending data, Mastercard CFO Sachin Mehra told MarketWatch. "The actual hard data still is very supportive of a strong consumer," he added.
Analyst Favors Mastercard, Visa Stock
After Visa's earnings report, USB analyst Timothy Chiodo wrote in a note to clients that both Visa and Mastercard offer attractive traits. Those include profitability, deep competitive moats, exposure to discretionary and nondiscretionary spending, and "an ability to grow through moderate recessionary conditions."
Visa stock and Mastercard are in IBD's credit card and payment processing industry group, which ranks No. 59 out of 197 industries.
Visa stock has a 21-day average true range (ATR) of 1.95%, while Mastercard has an ATR of 1.99%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
As some recent volatile market days fall off the 21-day average, many stocks' ATRs should decline.
