A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic is never beneficial to investors, it's good practice to play devil's advocate with investments from time to time.
In Motley Fool CAPS, more than 125,000 members have weighed in on nearly 5,400 stocks, sharing bullish and bearish opinions alike.
In the case of card-based transaction provider MasterCard (NYSE:MA), a total of 2,929 members have weighed in on its chances of success. I've already plucked out some of the bullish rationale backing MasterCard today, so here are three counterpoints to consider, courtesy of CAPS:
Disappearing plastic: Many expect the next wave of the credit crisis to hit consumer credit cards, where banks could cut credit lines and restrict their once-liberal dole-out of cards. For instance, American Express (NYSE:AXP) is already offering buyouts in order to send some customers packing. Consumers aren't pulling out their Visa or MasterCard at higher-end retailers like Abercrombie & Fitch (NYSE:ANF) and Saks as often, and even discounter Target (NYSE:TGT) is seeing its own credit card portfolio losses mounting.
Economic woes: While Visa (NYSE:V) and Discover (NYSE:DFS) pulled off impressive quarters recently, MasterCard's fourth-quarter earnings dropped 21% from a year ago, with its U.S. volume falling 5.2%. (The year-earlier quarter for MasterCard included a nice gain on stock sales.) Management said it's not immune to the economy, doesn't expect things to get better in 2009, and will likely fall short of long-term net-revenue growth targets for the year.
Pricey shares: Although MasterCard shares have fallen far from their peak last year, some investors still feel the price still doesn't justify the uncertainties ahead. While MasterCard doesn't face the same credit risk as lenders like Bank of America (NYSE:BAC), it could face significantly reduced transaction fee revenue from credit cards as banks and consumers pull back with the worsening economy.
Of course, MasterCard has thrived despite dozens of obstacles in the past. But the question about whether the company will do so going forward is why CAPS is such a great resource to augment your own analysis.
To see what the very best CAPS members are saying now about MasterCard, just click on over to Motley Fool CAPS and have a look -- it's all free, and even open to your opinion.
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