Analyst Says Capital One (COF) 'Very Cheap' Amid 'Game Changer' Acquisition

We recently published 10 Stocks Wall Street is Watching Heading into October. Capital One Financial Corporation (NYSE:COF) is one of the stocks Wall Street is watching.

Stephanie Link, Hightower Advisors’ chief investment strategist and portfolio manager, said in a recent program on CNBC that she bought Capital One because of the company’s “game changer” acquisition of Discover. She also believes the stock is “very cheap.” Capital One has a dividend yield of about 1%.

“I recently bought this about a month ago and I do like it as the stock is very cheap at 14 times forward estimates. But the reason I bought it is because they just closed the Discover Financial acquisition in July and I think it’s a gamecher in terms of them now having a scalable payments network, one of only two in the US. American Express is the other one and American Express trades at 20 times forward estimates. But I think the synergies will be substantial. I think the earnings power of something like $26 a share is very doable. And they have excess capital so they can return it to shareholders as well.”

Aristotle Capital Global Equity Strategy stated the following regarding Capital One Financial Corporation (NYSE:COF) in its second quarter 2025 investor letter:

“Founded in 1988 and headquartered in McLean, Virginia, Capital One Financial Corporation (NYSE:COF) is one of the largest credit card issuers in the U.S. The company was spun out of Signet Financial in 1995 under the leadership of founder and current Chairman and CEO Richard Fairbank. Over the past three decades, Capital One has evolved from a monoline credit card lender into a diversified financial services firm offering a broad range of consumer and commercial banking products.

In 2025, Capital One completed its acquisition of Discover, becoming one of the only major U.S. banks to own and operate a credit card network. This should position the company to enhance its profitability by reducing its reliance on third-party networks (i.e., Visa and Mastercard) and reduce earnings volatility as fee-based revenue increases. The deal also advances Capital One’s efforts to attract high-spend, premium-tier customers. Products like Venture X—the firm’s premium travel rewards card—stand to benefit from the integration of Discover’s transaction data with Capital One’s advanced analytics capabilities. This combination enables more personalized offers, deeper customer engagement and targeted cross-selling across lending and deposit products, reinforcing a cycle of data-driven growth…” (Click here to read the full text)

While we acknowledge the potential of COF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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