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3 Solid Credit Card Stocks With Up to 28% Upside (Update 2)

Shares of Capital One Financial closed at $49.29 Thursday, returning 17% year-to-date.

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The shares trade for 8.5 times the consensus 2012 EPS estimate of $5.79.

The company's 2011 ROE was 11.07%, according to HighlineFI.

Of course, the biggest news for Capital One is the Federal Reserve's long- delayed approval late Tuesday of the company's $9 billion deal to purchase ING Direct (USA) from ING Groep (ING), for roughly $9 billion in cash and stock. The approval of the ING deal sets the stage for the Office of the Comptroller of the Currency to approve Capital One's next major deal, to purchase HSBC's U.S> (HBC) credit card portfolio, for $2.6 billion, which is expected to include a common equity raise of up to $1.25 billion.

Sakhrani rates Capital One "Outperform," with a $62 price target, and estimates the company will earn $5.64 a share in 2012, followed by EPS of $5.53 in 2013.

The analyst noted that Capital One's managed credit card portfolio average loan balances of $85.9 billion in January were flat from December, but rose 8% from a year earlier.

Interested in more on Capital One? See TheStreet Ratings' report card for this stock.

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