1 Reason Wall Street Is Obsessed With Mastercard Stock

Key Points

• It operates one of the best middleman businesses in the world.

• This is why its profitability is consistent and it boasts high margins.

• 10 stocks we like better than Mastercard ›

Now that the door has closed on summer 2025, we can tease out some winners and losers on the stock market that season. One that definitely belongs in the former category is Mastercard (NYSE: MA), which rose by almost 10% during the warm months.

These days, according to data compiled by MarketBeat, of the 28 analysts who track the company, 26 believe it's a buy. So the company has been a hit with both investors and pundits lately. Let's pick apart why, and whether this bullishness is appropriate.

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Swipe and win

Mastercard is a titan. Among U.S. payment card incumbents it's No. 2 in terms of cards in circulation worldwide; per recent statistics compiled by The Motley Fool, its tally was almost 1.1 billion (the leader, Visa, had 1.3 billion).

Image source: Getty Images.

It's important to note that both Mastercard and Visa do not actually provide credit to holders of their branded plastic. Instead, they act purely as processors of the transactions. Issuers, usually banks, are the entities actually supplying those funds.

What's advantageous about this for Mastercard is that since it's not a lender, it assumes no risk. The company essentially operates a massive middleman business, taking a small cut of each and every transaction. In a world economy that's thriving, all things considered, and continually moving toward noncash means of payments, that's a fine position to occupy.

A master of consumer finance

As a result, Mastercard is consistently and heavily profitable. And increased payment card take-up mixed with humming economies produces growth. In its most recently reported quarter, the company's net revenue grew a beefy 17% year over year to $8.1 billion, while non-GAAP (adjusted) net income improved at a 16% clip to $3.8 billion. Both figures easily topped the consensus from those analysts.

Mastercard has a very durable and extremely attractive business, and just never seems to stop growing. I've always felt this is a superb stock to own, and like many Wall Street pros I continue to believe it's a no-brainer buy.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.