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Mastercard. Mastercard big surge up yesterday. Um, we've seen Visa really go back up to the upside, but this is where things get interesting for me. So what we have here and if if I'm doing this correctly, we can see that you have a trend line right through here. Okay? So notice pivot low from April 2025 to this pivot low here. And you also have a double top. And so what I look for is multiple factors. Now, this is now switching into swing trade mode. Now swing trade, this actually looks like a reasonable opportunity for a pullback on Mastercard. Um it's vertical. It's gone from about $470 all the way up to 600 in almost a straight line. It's running into two different trend lines, a horizontal line and a ascending line. And ultimately, you should see some sort of pullback in the near term on Mastercard. So, I like that one as a swing trade.

Um, we've seen Visa really go back up to the upside, but this is where things get interesting for me. So what we have here and if if I'm doing this correctly, we can see that you have a trend line right through here. Okay? So notice pivot low from April 2025 to this pivot low here. And you also have a double top. And so what I look for is multiple factors.

Now, this is now switching into swing trade mode. Now swing trade, this actually looks like a reasonable opportunity for a pullback on Mastercard. Um it's vertical. It's gone from about $470 all the way up to 600 in almost a straight line. It's running into two different trend lines, a horizontal line and a ascending line. And ultimately, you should see some sort of pullback in the near term on Mastercard. So, I like that one as a swing trade.

But, one thing to note particularly out of the four new buys is that these are all really wide moat high margin businesses. For example, Visa and Mastercard, they are basically toll booths on global payments.

They are both running margins over 50%. Then, turning to valuations, the most interesting of the bunch from the Simply Wall Street inbuilt discounted cash flow analysis is definitely Mastercard. It's estimated at 47% undervalued, but zoom out across all four and three of them are actually screened as undervalued by the modeling, not just Mastercard.

Um one is that uh Bill Ackman's uh fund disclosed uh sizable portion, like roughly 1 to 1.25 billion dollars worth, which is kind of big. So, you can see here with with MasterCard, if we just look at it this way, this is a really nice move. It's a nice breakout right above 580. By the way, this is going higher. This isn't going to be a fake out. I'll tell you why in just a second. But um this stock is now at 600 bucks, definitely on track to keep going tomorrow.

Here on the 10-minute chart, this is really interesting. Okay. 10 minutes in, the move's over. The money's been made. Boom. You got a really nice pop right at the open. So, if you weren't here right at the open, you kind of missed the move. All right? But here's the thing. This little orange line here, this is the volume-weighted average price. What's important is, and you'll see more of this on Visa in a second, what's important is that the stock runs up above the volume weighted average price and never falls below it. I mean, it did for a minute, you know, some algorithm was probably out going to the bathroom, uh came back and then started buying again. But, um this is the way you can really tell whether a move is {quote} real, whether it's going to hold. And that is you watch to see how the stock acts after the morning run. Will it stay above the volume weighted average price? In this case, it did. So, I think all systems are go and this should blast through I think 620 is definitely a reasonable tentative price target. I don't like to really give price targets per se because it's really just tantamount to guessing, predicting, which I don't like to do. But, there you have it.

So, the bottom line is for both of these, I think you got to be in these stocks. Uh if you've been looking for stocks to buy, these would be two. When you see moves like this, like in a big mega cap stock like like um like Mastercard. This isn't just a one-hit wonder where that tomorrow it's going to be back to 580. You might get that on these goofy biotech stocks or some of the smaller cap names, but on a stock like Visa uh Mastercard, these moves when they happen, they're real. So, you can expect these both to move higher.

Well, this was the breakout at 580, right? Well, this is another big breakout area that it's not quite broken through. So, it's like it it breaks through one resistance area at 580 and pushes right up against another resistance area at 600. So, we could probably expect to see a little bit of wiggle and jiggle going on here tomorrow, but I think ultimately this one's going to move higher.

Mastercard, which is my second largest position. It's 13% of the portfolio. It's nearly a $200,000 position with around $52,000 in gains. I really bumped up Mastercard a lot during the dip this year. It's been one of the brighter spots in the portfolio. When I look at Mastercard today, it trades at $595 per share. And the buy target that I set for Mastercard is 450. So to put that in perspective, Mastercard would have to trade down from where it currently is year to date at the 596 all the way down to below the lowest point this year. So it' have to have a healthy dip. Now again, some of you may say, Joseph, that's never going to happen. You're never going to buy Mastercard at that price. But it could happen. When you look at companies, they trade around a lot. Some of them drop 20, 30% in a couple of months. Some of them dropped 10% after an earnings report. Companies can trade around a lot in a week's time. Look how volatile this stock has been over the past 5 years. And this is one of the most stable companies in the world. Yet, we've seen jagged spikes and dips of 20 to 30%. And again, the goal here is to be very strict with this $10,000 to make it only go towards a company that really deserves it, that's really in a meaningful dip.

Now, if we look at how this breaks down, we can again plug in some assumptions here. And this again is a very conservative assumption that Mastercard's earnings per share growth rate slow down to around 12 to 13%. We have it at 12.7%. Now Mastercard has been growing much faster. Their earnings per share growth rate is around 15 to 20% or even higher. So 12% is assuming a big deceleration in EPS growth. With Mastercard, this is one of the companies that I actually believe the appropriate multiple for the company should remain relatively high at like a 29. It's just a really stable cash flow positive capital-like company. They're not doing any big capex. They're expanding their mo and market share. They're growing into services. This is not one that I believe should trade down to the low 20s. So, we have an appropriate EPS multiple of 29. That means that looking forward with these assumptions up here for the next 5 years, we would get an 18.5% compounded return every single year. That's a really high return. Compounding at 18 to 19% is crazy. that well over doubles your money in just a few years. So, we add in Mastercard at the $450. So, we add in Mastercard at the $450.

Now again remember which is the method that I use 90% of the time. It is this method which is the discounted free cash flow method based on the business uh lasting for 20 years. So if the business lasts for more than 20 years that is a bonus and the intrinsic value should be a lot higher.

Now remember before using this method to value a stock what is the condition? The condition is that the business must have a history of consistently growing free cash flow. If it doesn't, you cannot use this method.

So, let's double check. Does Mastercard meet that condition.

Very simple. Scroll up, click on financials over here. Uh, you can look at the line chart, you can look at a bar chart, up to you. I prefer a bar chart and look for this thing called free cash flow. Yes. So this business must have a consistently increasing free cash flow in dark green. So is it pretty consistent? Does it go up pretty consistently? Yes. So you can use this method.

Now do bear in mind that uh remember that free cash flow is equal to the cash uh operating cash flow minus the capital expenditure.

So based on this method of projecting the free cash flow for the next 20 years and discounting it to present value, what is Mastercard worth? Mastercard is worth $719.

And if you want to know the exact calculation method, it is right here. Let me show you. Scroll down and there. So, intrinsic value calculation, select uh free cash flow method over here. And it shows you the entire calculation that gets to $719 per share.

So bear in mind that this intrinsic value is based on the growth projection where the business grows at 15% for the next 5 years and then subsequently grows at 17% from year 6 to year 10 and for the last 10 years it grows only at 4%.

Now for those of you who are new to stock oracle you may be a bit confused and say okay so if the intrinsic value of 7 is 719 then what is oracle value why does oracle value show me that it is worth 561.

So Oracle value is a proprietary valuation method where it will select the best method for this particular company. So in the case of masterard the best method to use is the discounted free cash flow method.

So in other words, how does Oracle value get 561? Now again it's a proprietary algorithm but my guess is that what the algorithm does is that it uses a lower growth rate.

So in this case, my um my guess is that the AI algorithm probably adjusts the growth rate down to about let's say 9.5%. And then recalculates based on 9.5% growth for year 6 to year 10 and it comes up with the intrinsic value of about that about 559 or roughly about $560.

So in other words, the oracle value is an AI algorithm that does adjustments to be more conservative to come out with a figure if it doesn't agree on fact sets uh data projections.

Now some of you may say uh but can I put in my own projections? What if I don't agree with the oracle value? Sure, you can put in your own projections. That's the beauty of this whole model.

So let's say for example you are not as pessimistic as the Oracle value AI and you think no I think they can grow at 10% or they can grow at 12% for year 6 to year 10 then you can always put in your own projections which you're more comfortable with right so if you put in 12% here and calculate then you can see that the intrinsic value based on your projection will be $67

So I keep saying that intrinsic value is always based on projection. So it's up to you. Do you want to be optimistic of a higher projection? You want to be more pessimistic of a lower projection. Now sometimes you can do both and say okay this is the best case scenario. That's the worst case scenario. And then you take a base case average. So there are many ways you can use this calculator.