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Capital One Financial Corp. (COF), Discover Financial Services (DFS), American Express Company (AXP): Three Stocks Poised to Continue Rising

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The term “credit score” is tossed around like it’s going out of style. Even with the plethora of knowledge available on improving this crucial statistic of financial well-being, many consumers fail to pay off their debt.

According to Statistic Brain, which verifies reports through the Federal Reserve and TransUnion, 56% of consumers carried an unpaid balance in the past 12 months.  This isn’t good for certain aspects of the economy, but some companies are cashing in on those unpaid bills and excessive spending — companies such as Capital One Financial Corp. (NYSE:COF) and Discover Financial Services (NYSE:DFS).

Between expanding banking operations and increasing credit card loans, these two companies are strengthening their brands among the financial juggernauts.

Capital One Financial Corp. (NYSE:COF)

Forces combine
If you ask regular television viewers about Capital One Financial Corp. (NYSE:COF), they’ll probably recall humorous commercials led by Alec Baldwin and the simple slogan, “What’s in your wallet?” The commercials are about the company’s credit cards, but on the banking side, Capital One Financial Corp. (NYSE:COF) is taking online banking to a new level in encouraging customers to save.

Transformed from ING Direct (which added over 7 million customers), the new Capital One Financial Corp. (NYSE:COF) 360 offers checking accounts that yield interest, access to AllPoint ATM machines nationwide, and no fees or minimum balance. Along with savings accounts and an affordable investment service, Sharebuilder, Capital One Financial Corp. (NYSE:COF) has been busy integrating its new brands.

Beyond the newer offerings, consumers have been catching on to the company for some time, as it has compiled over 74 million customer accounts in less than 20 years. Customer satisfaction is so high that Neiman Marcus has agreed to a multi-year extension of its private-label credit card, part of the high-end retailer’s loyalty program. Capital One’s pursuit of credit card partnerships has proven successful and should translate to increased profits.

Capital One Financial Corp. (NYSE:COF) may be smaller than the big boys of the Dow Jones, but it holds its own with over $296 billion in total assets. The stock trades at a discount to book value, and its P/E of about 9 is approximately 25% lower than the average in the financial sector.

The company reduced credit losses and increased revenue 12% in the second quarter, but more importantly for investors, it piled up $2.5 billion in cash last quarter. This cushion should allow Capital One to stay true to its goal to hire 2,100 employees by the end of the year and help investors rest easy in the long term.

Up-and-coming club
Capital One Financial Corp. (NYSE:COF) has built a strong brand, but like most credit card providers, it partners with third parties such as Visa and MasterCard for payment processing. However, Discover Financial Services (NYSE:DFS), which has lending operations and its own closed-loop network, has been soaring as well, with shares up over 22% for the year.

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