Capital One Financial Corporation (NYSE:COF) is one of thestocks Jim Cramer discussed, along with market shortages. Cramer noted that the company’s “core business is doing very well,” as he said:
Putting it all together, while the quarter wasn’t perfect, the core business is doing very well, and the integration of Discover is proceeding as planned… I’m worn down by Capital One. It was such a great stock, but this is, you know, look, Richard’s taking a long-term view, and I wanted the integration of Discover to go smoothly, and now I’m worried about this. I trust Fairbank to be able to integrate Brex while he turns Capital One into a full-service financial company, offering both consumers and businesses everything they might need in banking and credit cards.But I don’t think many other people are like me and know his work and are willing to be patient.
So if the Brex deal’s this good, why on earth did Capital One stock get eviscerated? Well, they missed earnings expectations even as I’m not as concerned as other people, but really I think it’s sold off thanks to high expectations… I’m still a believer. Capital One’s using this unique period where mergers that would normally be blocked are not going to be blocked because of the Trump administration’s laissez-faire approach to antitrust. And they’re building a very impressive, very formidable challenger in the financial services space, especially in credit cards. After today’s slide, Capital One trades at less than 11 times this year’s earnings estimates.
That’s so far below the average large bank… I love Amex… But even if Capital One closes that valuation gap by half, getting to a point where it sells for 16 times earnings, that would make this a $330 stock. It closed at $217 today, so that’s why I’m sticking around in Capital One for the Charitable Trust, but it’s been a painful couple of days. Here’s the bottom line: If you missed the stock’s tremendous rally last year, I think it’s finally going to come back down to where you can buy it again, probably on Monday.
In fact, this afternoon, the Charitable Trust upgraded Capital One, taking it from a 2 rating, which means buy on weakness, to a 1 rating, means it’s the stock we are buying now. These last few weeks have been tough for the stock, but from my perspective, that just means you’re going to be getting a better entry point, and as I’m telling club members, I’m probably going to buy back the stock for the trust that we sold much higher. Yes, the stock is down that much that, to me, it’s all [buy, buy, buy].
Photo by Adam Nowakowski on Unsplash
Capital One Financial Corporation (NYSE:COF) provides banking and financial services, including credit cards, loans, deposit accounts, and commercial banking solutions.
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.
Hedge Fund Resource Center