Evaluation of Capital One Financial Corporation Among Billionaire-Endorsed Cheap Stocks

We have recently released a compilation of the 15 Best and Cheap Stocks to Buy According to Billionaires. This article will examine Capital One Financial Corporation (NYSE:COF) in comparison to other inexpensive stocks owned by billionaire investors.

The S&P 500 is currently near its all-time high, and short-term market signals are unclear due to recent U.S. tariff policies coming into effect.

In a notable move, billionaire Warren Buffett, the CEO of Berkshire Hathaway, sold an unprecedented $134 billion worth of stocks in 2024. This decision is looked at as a key indicator by investors for gauging market conditions. Historically, periods when Buffett’s firm is a net seller tend to be followed by below-average market performance, leading many to speculate this might signal a downturn in the stock market for 2025. With market uncertainties rising, investing in undervalued stocks held by billionaires could be a wise choice.

In a discussion with CNBC on March 11, Chris Grisanti, the chief market strategist at MAI Capital Management, emphasized the importance of market signals and valuations to navigate the investment landscape effectively. He noted that the price at which one enters a position is critical, particularly as distortions in valuations have surged in recent years, with growth stocks significantly outperforming their value counterparts. Grisanti also highlighted that market corrections are often influenced by technology stocks, causing natural and necessary pullbacks.

Grisanti remarked that the recent market decline is a result of poor performance in economically sensitive sectors, including banks and consumer discretionary industries, which suggests a potential economic slowdown. Moreover, the tariff policies of President Trump pose a significant challenge for local businesses facing elevated tariff rates.

As British economist John Ross observed in a recent interview, President Trump’s tariff strategy could adversely affect the U.S. economy. Ross stated, “The only issue with the tariffs is which combination of bad effects will you have.” He added that the Federal Reserve’s role is to manage inflation, warning that raising interest rates to curb inflation could contribute to an economic slowdown.

Billionaire investor Leon Cooperman recently commented on CNBC’s Squawk Box, indicating that the president is generally moving in the right direction but doing so in a way that could create instability. Cooperman noted, “The president is focusing on reducing the deficit, which is the right thing to do.”

Capital One Financial Corporation’s Position and Future Prospects

Using the exclusive database of billionaire stock holdings from Insider Monkey, we identified the 15 most attractive and affordable stocks, each with a forward P/E ratio below 15, organized by the number of billionaire investors. For stocks with equal billionaire backing, forward P/E ratios were used for further ranking.

Capital One Financial Corporation (NYSE:COF) is a comprehensive financial services firm providing banking options such as checking and savings accounts, credit cards, auto loans, and commercial lending. Positioned as one of the largest credit card issuers in the U.S., the company is eyeing an acquisition of Discover Financial Services. However, this proposed $35.3 billion deal is under scrutiny by the Department of Justice for possibly being anticompetitive.

Regardless of the acquisition outcome, Capital One holds a strong market position. In Q4 2024, the company reported a net income of $1.1 billion and a yearly profit of $4.8 billion, with an EPS of $3.09 quarterly and $13.96 annually. With a significant growth in consumer banking deposits, it maintains a robust liquidity coverage ratio of 155%.

On March 11, analyst David George from Robert W. Baird changed COF’s rating from Neutral to Outperform and raised the price target from $190 to $200, citing strong profitability as a critical growth driver. George expects normalized earnings to reach $22 per share, surpassing the consensus estimate of $18.40.

Overall, COF ranks 1st on our list of affordable stocks favored by billionaires. While its potential as an investment is recognized, we believe that AI stocks could offer superior returns in a shorter timeframe. For those seeking a promising AI investment trading under five times its earnings, we invite you to read our report on the cheapest AI stock.

READ NEXT: 20 Best AI Stocks to Buy Now and 30 Best Stocks to Invest In According to Billionaires.

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