Capital One Financial Corporation (COF): CEO’s Going For A “Worldwide Card,” Says Jim Cramer

We recently published 10 Stocks On Jim Cramer’s Mind As He Gives Up On Becoming Fed Chair. Capital One Financial Corporation (NYSE:COF) is one of the stocks Jim Cramer recently discussed.

Capital One Financial Corporation (NYSE:COF)’s merger with Discovery has made it one of Cramer’s favorite stocks in the banking industry. He is particularly enthusiastic about the potential for the firm to develop one of the biggest payment networks in America and eat away market share from Mastercard and Visa. This time, however, Cramer aimed higher and indicated that Capital One Financial Corporation (NYSE:COF) might also aim at American Express:

“Okay, now get this, David. Richard Fairbank, often considered to be the actual dean of banking and I bet you even Jamie, I mean he’s like Cher, would agree with that. He has put together a deal with Discover, it closed. I thought that this would never get the blessing of the Biden administration, but then, Harris didn’t win. So this gets approved. He’s now got the second exchange network after Amex. David, he’s going for it. He’s going to go for a worldwide card. And I would not bet against Richard Fairbank.  Hence why it is up ten dollars of a quarter that was very confusing but it is clearly going in the right direction.

“But remember that multiple would still go up very big. And that’s why this stock is roaring today.”

In his earlier comments, the CNBC TV host discussed Capital One Financial Corporation (NYSE:COF)’s Discover deal in detail:

“The recent run is all about Capital One’s acquisition of Discover Financial in an all-stock deal valued at $35.3 billion…

“In simple terms, this acquisition gives Capital One ownership of the Discover Global Network, allowing them to scale up to become a truly global payments platform… There’s a lot more going on here. For starters, Capital One expects to realize $1.5 billion in cost synergies from this deal in 2027. They see another $1.2 billion in network synergies… All told, management believes this deal’s going to boost their earnings per share by 15% once we get to 2027, and that is substantial. I mean, this is a bank, you usually don’t get that kind of growth. The Discover deal also creates new opportunities for Capital One… After this merger, the combined company is the largest credit card company as measured by outstanding customer balances…

Capital One Financial Corporation (COF): CEO's Going For A "Worldwide Card," Says Jim Cramer

“… Put it all together, and it’s easy to see how capital stock could keep being rewarded with a higher price-to-earnings multiple. Right now, the stock sells for just 11 times next year’s earnings estimates, which makes it incredibly cheap versus American Express at 20 times earnings. I use Amex because it’s the closest comparison now that the Discover deal is closed…”

While we acknowledge the risk and potential of COF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COF and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.