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Anatomy of Success: Mastercard (MA)

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Checking out a stock’s Zacks Rank is one of the best ways to predict how it will perform over the next few months. The Zacks Rank harnesses the power of earnings estimate revisions and helps you identify the companies with the best chance to beat the market.

The model is great at finding stocks set to outperform over the next one to three months, but it also gives an investor the ability to ride a particular company while it continues to soar beyond that window. And strong Zacks Ranks are not particularly easy to come by, with only 5% of the stocks tracked by the system earning a #1 (Strong Buy).

Below, you will read about one specific company that helped prove the strength of the Zacks Rank. If investors had followed our model when it identified this payments giant, they would have achieved massive profits.

Mastercard Incorporated (MA - Free Report)

Mastercard develops and markets payment solutions and provides industry-leading analysis and consulting services to financial institution customers and merchants. Its family of brands includes MasterCard, Maestro and Cirrus.

MA has been identified as a solid option by the Zacks Rank several times over the past year. The company first earned a #2 (Buy) on July 7, 2017 as its earnings outlook was improving thanks to analyst revisions. That bullishness was followed by a solid report just three weeks later, wherein Mastercard posted better-than-expected earnings and revenue. The company also saw EPS growth of 14.6% and revenue growth of 13.4% in that quarter.

Mastercard would maintain its #2 (Buy) for several weeks and never slipped below a #3 (Hold). It would later earn a #2 (Buy) again on Sep. 29, and then it was placed on the #1 (Strong Buy) list on Nov. 3. This top designation came just a few days after another great quarter for the company. This time around, Mastercard posted adjusted earnings of $1.34 per share, beating our consensus estimate by 11 cents and improving 24.1% year over year.

Since then, MA has provided solid returns and has comfortably stayed above a #3 (Hold). Investors will also note that MA is currently sporting a Zacks Rank #1 (Strong Buy). This designation came on the back of yet another incredible quarter, this time include a massive earnings beat of 49 cents and EPS growth of 48.5%.

The below chart demonstrates the price performance for MA and 12-month forward looking EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #2 (Buy).

MA was clearly a huge winner for those that followed the Zacks Rank. Shares of the payments giant are up about 57.5% since it was first considered a “Buy” last year. Investors should remember that our model is the simplest way to identify elite stocks poised to beat the market on a consistent basis.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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