No. 2: Capital One
Current Return: +32%
Investor: Philip van Doorn
In his initial article, “Capital One: Top Bank Stock Pick for 2012,” TheStreet.com contributor Philip van Doorn makes the case that financials in general aren’t as bad as you think — and certain smaller banks like Capital One (NYSE:COF) are, in fact, ready to soar.
As we all know, financials did in fact soar. Indeed, they represented the top-performing sector in Q1 2012, up more than 20% — partially helped along by the results of the Fed’s financial “stress tests,” which led a host of banks and other firms to boost their dividends. As mentioned before, JPMorgan and Bank of America led the Dow Jones with 38% and 72% gains. Capital One was no slouch, either, notching 32% gains in the quarter!
Also in past months, Capital One finished its acquisition of ING Groep‘s (NYSE:ING) ING Direct business in the U.S., and it also announced it would make a public offering of $1.25 billion in common stock to help fund its purchase of HSBC’s American credit card business.
The risks to financials remain the same — the sector is beginning to look somewhat overbought, and the crises in Europe and foreclosure issues at home are far from solved. But so far, COF has provided plenty of padding.