Officials from the U.S. Federal Reserve recently revealed that they may not pursue interest rate hikes for the remainder of 2019. The decision to turn dovish in late 2018 sparked an early rally for U.S. blue chips this year. Consumers have been weighed down by rising rates, even though they remain near historic lows.
This should not dissuade investors from holding credit card stocks, which have been top performers over the past several years. Margins have continued to improve during this rate tightening cycle.
VISA (NYSE:V) stock has climbed 16.8% in 2019 as of mid-afternoon trading on March 15. The stock is up 25% year over year. In its fiscal 2019 first-quarter results, VISA reported an 18% increase in quarterly profit.
Total payment volumes rose 11% and processed transactions also climbed 11%. VISA is not the screaming buy it was in December, but the company still stands to gain in a big way from the current credit environment.
Mastercard (NYSE:MA) stock has climbed 21.6% in 2019 so far. Shares are up 27% year over year. In its recent Q4 2018 report, Mastercard reported a 15% year-over-year increase in revenue. The company posted earnings per share of $1.55 which narrowly beat analyst expectations. Investors can expect its fiscal 2019 first-quarter results to be released in late April or early May.
These stocks are pricey right now, so value investors may want to wait for a slight pullback before jumping in.
