Better way for investing

Mastercard (MC) (P/E: 15.8) With consumers on their backs, you might be inclined to run away from credit card companies. But MasterCard is really a payment-processing network that is exposed to virtually no credit risk from deadbeat consumers. Yet it still controls nearly a third of the world's plastic. And while the company lags rival Visa in the fast-growing debit card market, its lower valuation more than compensates. Based on price/earnings ratios, MasterCard's shares trade at about a 25% discount to Visa's.

J.P. Morgan Chase (JPM, Fortune 500) (P/E: 14.4) The words "quality" and "bank" haven't exactly been synonymous lately. But I think it's worth looking at some of the strongest players in the field, like J.P. Morgan, which has already taken market share from weaker competitors.

Not only is J.P. Morgan dominant in many lines of banking, but it is now thoroughly diversified: 30% of its revenue comes from retail banking, 23% from investment banking, and 20% from credit cards. And though its shares have risen off their recent lows, the current price still doesn't reflect the bank's long-term potential earnings power.

Pat Dorsey is the director of equity research for Morningstar.