Mastercard Inc. (NYSE: MA) rose rose over 10 percent in early trading after the credit card company announced better-than-expected fourth quarter results despite concerns about pressure on U.S. consumers. The jump was primarily attributed to international growth and the sale of its holdings in Brazilian credit card company Redecard. Mastercard did note a slowdown in domestic consumer spending, but is more insulated with about half of their business being generated outside of the United States. Shareholders are hoping that the U.S. can stay out of a recession and the rest of the world can stay on track.

Mastercard reported fourth quarter net income of $304.2 million, or $2.26 per share, versus $40.9 million, or 30 cents per share, a year earlier. Results did include $1.37 per share from the sale of its stake in Brazil’s Redecard that went public in July. The company is also facing less stress than others like Amex because it doesn’t issue cards itself; rather, it makes money from processing and transaction fees that it charges bank customers. Consequently, the company could see lower profits if there were a global slowdown, but right now worldwide gross dollar volume jumped 15% this year, processed transactions increased 17% and the number of cards in circulation rose 13%.

Mastercard offered some useful insight into the domestic economy as well. The firm noted that consumers were spending more money on staples than discretionary items. Consumers are moving away from items like jewelry, restaurants, and home furnishings to instead purchase things like gasoline, groceries, and personal health care items. The company also noted a slowdown in spending in the U.S.; however, spending still did manage to grow at 5.1%. However, countries in Asia, Middle East, and Africa saw their spending increase an astounding 42%. Meanwhile, our neighbors in Latin America saw spending increase 28%. So, while things may be bad in the U.S., they are certainly booming abroad.

In the end, this is another interesting stock that many investors grouped with consumer spending in the United States alone. It is important to research companies as anyone who did their homework would realize that much of Mastercard’s profits are derived abroad and the company is not responsible for any loans that are defaulted on as it does not issue the cards itself. Combined, these factors make MA a stock that is definitely worth watching!

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Garmin Ltd. (NDAQ: GRMN) are trading sharply off of their highs of around $120 per share in late October to their current levels of around $70 per share on concerns about consumer spending and market saturation. Many shareholders are hoping that these concerns are overblown and that the company can work to turn itself around and return to its previous highs. So, what is the company really worth and what do its future prospects look like?

Many analysts are now saying that it may be time to buy as the GPS-maker isn’t seeing any signs of weakness impacting its U.S. business and management believes the concerns surrounding European personal navigation market saturation are overblown. The company expect growth of at least 40% in 2008 in all but the most penetrated countries with Garmin taking share. These were the two largest concerns that weighed on the stock in recent months, particularly as the U.S. economy moves closer to a recession that could spread to other developed countries as well.

There are still some problems with Garmin, however. Many analysts believe that the current margin relief is only temporary and that negative structural trends in mix and pricing should make it difficult for the stock to sustainably outperform. In other words, more competition will force the company to compete on pricing and bundle addtional products and services, which will make it difficult to live up to the high expectations that it has from its past. Many are also concerned about the company’s attempts to penetrate the handset market and would prefer to see a greater focus on software partnerships.

In the end, the first quarter is likely to be a good one with seasonable shifts to higher-end merchandise should prop up margins and ease investor concerns. However, increased competition and competitive pricing will likely keep the company from seeing the earnings surprises to which many are accustomed. This means that we may not see another run-up in the stock price as we did last year. However, many believe that the stock could reach $80 to $85 per share in the near term. This make GRMN a stock worth watching!

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Dillard’s Inc. (NYSE: DDS) management received some advice from two hedge funds looking to boost the company’s share price earlier this week. James Mitarotonda’s Barington Capital and Michael Popson’s Clinton Group disclosed a letter to the board of directors suggesting that the company better manage its inventory, close under performing stores, and sell properties or sell and lease back some stores. The move follows a 52 percent drop in the company’s share price since it began making changes last summer. Shareholders are hoping that the company will heed the advice and work to turn itself around with the help of two great activists.

“Given the Company’s poor share price performance over the past six months, we are convinced that Dillard’s is an undervalued asset with tremendous opportunity for improvement,” the pair said in their letter. “Unfortunately, it appears to us that you have not only ignored our letters but have also done little to improve the Company on your own initiative, as Dillard’s financial results have gone from bad to worse since our initial communication in June 2007.”

The activist hedge funds made a series of specific proposals to the company. First, they suggested initiatives aimed at improving cost containment, inventory management and the company’s merchandising strategy. Secondly, they encouraged measures to enhance the value of the company’s real estate properties, including the conversion of certain properties into higher and better uses, the closure of underperforming stores and the sale/leaseback of owned properties. Thirdly, they suggested a boad evaluation of the company’s management team and executive compensation. And finally, they encouraged the company to improve its record in corporate governance by removing the dual class share structure, terminating the poison pill, and separating the chairman and chief executive positions.

“Dillard’s can and must deliver considerably better financial and share price performance,” said the hedge funds. “As significant stockholders of the Company, we are committed to taking all actions necessary to enhance shareholder value.”

In the end, it will be interesting to see if the company listens this time around given their failures when ignoring the hedge funds last time. The pair of hedge funds are known for their activist involvements, so they may take future actions in order to attempt to overtake the board. Unfortunately, there is a poison pill in place that would make this extremely difficult; however, it would be an expensive and annoying process for the company who may just decide to listen if such a threat surfaced. Combined, these factors make DDS a stock worth watching!

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