Mastercard (NYSE:MA) is down 38% in the past month and the stock is now at a new 52-week low. The last time it was trading at these levels was January 2019, fresh off the heels of the downturn that took place late in 2018. The stock is now trading at a price-to-earnings multiple of 27, which is low given that it’s normally been trading at over 40 times its earnings.
For investors, this could be an opportune time to buy shares of Mastercard. The coronavirus is causing layoffs and people are working reduced shifts. That’s going to put a strain on individuals and lead to more credit card spending. While there is a higher risk of default for lenders, with stimulus packages in the works for Americans, the government isn’t about to let people get into bankruptcy due to the coronavirus.
And with consumers panic buying and spending excessive amounts on household goods, cleaning supplies, and groceries, there’s little reason to believe that when Mastercard reports its earnings in a little over a month, that they’ll disappoint.
Rival card-issuer Visa (NYSE:V) is also trading around its 52-week low as well and is also trading around 27 times earnings. Both of these stocks could be attractive buys for investors as consumers have less cash on hand and look to credit to help them during these troubled times.
In 2019, shares of Mastercard soared around 60% while Visa generated returns north of 40%. If we look at a period of 2017 through to 2019, then the delta between their two returns becomes even greater with Mastercard doubling since then and Visa rising by 64%.