Q. Can I expect MasterCard Inc. stock to keep going up along with the economy?—V.M., via the Internet

A. The world's second-largest payments network behind Visa Inc. improved its bottom line during recession by aggressively reducing expenses.

While its cuts in administrative and marketing expenses have significantly improved its profit margins, that improvement will be difficult to sustain. A rising economy will likely dictate a renewal of advertising and other marketing efforts among card brands.

Increases in transactions and revenue growth have been comparatively modest, with the greatest gains from individuals switching to debit cards from cash and cheques. Volume has increased in Asia, Europe and Latin America, while the US and Canada have lagged.

MasterCard "A" (MA) shares rose 79 percent last year and are down slightly this year. The firm had a profit of $452.2 million in its most recent quarter versus a loss a year earlier.

About 31 percent of the world's credit cards bear the MasterCard brand name, with Visa Inc. holding about a 63 percent share, according to the Nilson Report. MasterCard also trails Visa in debit cards.

It is a competitive field. Visa has made market share gains at MasterCard's expense due to bank consolidations and card issuers closing accounts or selling their card portfolios. American Express has also captured some market share from MasterCard in the US.

The consensus analyst opinion on MasterCard shares is a solid "buy," according to Thomson Reuters, consisting of 11 "strong buys," 16 "buys," two "holds" and one "underperform".

Despite an excellent balance sheet with lots of cash and almost no long-term debt, MasterCard faces lingering legal and antitrust problems in regard to alleged past anticompetitive behaviour. Possible fee regulation by governments or increased fee pressure from banks are other serious concerns.

MasterCard's global payment brands include MasterCard, Maestro and Cirrus, which it licenses to financial institutions that issue cards to customers. CEO Robert Selander has led the company since 1997.

Its former owners, the member banks, have a 41 percent non-voting share. Outside investors own about 49 percent of the stock and 83 percent of the voting power. A charitable trust holds the remaining 10 percent of stock and 17 percent of voting power.

MasterCard earnings are expected to increase 19 percent in 2010 versus 21 percent forecast for the business services industry. The five-year annualised return is projected to be 18 percent compared to 11 percent expected industrywide.

Q. Are target-date funds a good idea or not?—L.S., via the Internet

A. Target-date funds become increasingly conservative in their portfolios over the years as the investor moves toward a specific retirement date, which is usually retirement.

Typically investing in a collection of mutual funds, they work best for those who prefer to have someone else make their investment adjustments.

What investors must bear in mind, however, is that target-date funds are only as good as the underlying funds and will go down in value when the market does. Having a target date is no assurance of how much money will be there on that date.

Andrew Leckey answers questions only through the column. Address inquiries to andrewinv@aol.com.