COF - Capital One

Discussion in 'Stocks' started by DeepFried, Feb 1, 2008.

  1. This thing has the lowest price-to-sales ratio in their industry, lowest p/e, and they don't have any more exposure to the big credit fart via their bank and ABS sales than anyone else. I don't understand why MA seems to get all the attention as the shrewd credit card vendor and COF is the bald headed step child.

    I'm by no means an expert on this stuff and I'd be happy to hear from anyone who has insight into this industry.
  2. You can't just compare COF to MA. COF is a bank (that issues credit cards), MA is a processor of credit card transactions (among other things, but it isn't a bank). If people don't pay their CC bills, it's COF and the other banks that take the hit. MA only takes a hit if people stop using CC's. A generalization, but you get the gist.

    A better comparison for COF would be AXP, DFS, BAC, etc.
  3. Okay, thanks, mb. COF still is cheaper on a p/s basis than AXP, DFS, BAC and WFC. Maybe it's cheaper because the others are perceived as higher status brands. Or maybe their balance sheet completely stinks compared to the others. :confused:
  4. COF is the CFC of the cc business.
  5. Exactly, COF is the CFC of the cc business. but this is too early to short IMO. COF is moving with the banking sector and the rally there is not over. Wait till CC card companies will be hit with first delinquent CC bills, then start writing off the losses in bad loans. Liquidity problems may happen too.

    Other nice stock to short long term in this sector is DFS, and to lesser extend BAC and AXP.

    Note that CC company may just keep unpaid balance on the sheet and accept minimum payment... So when this will all happen, i mean they will start writing off unpaid loans, it is not sure.
  6. dsq


    MA takes the transaction fee for processing- thats it...they have no hand in the credit loan/finance part of the CC.No exposure.If people use credit card less they make less.Thats it.
  7. The tale of the tape: COF down 7% - 8%. MA up a buck and change.
  8. we know that. The best thing out there is DFS :)
  9. DFS down 9% on the day.

    "Best" Best long or short?
  10. short via puts
    #10     Feb 4, 2008