1. Capital One Financial
Shares of Capital One ( COF) Financial of McLean, Va., closed at $62.88 Monday, trading for 1.6 times tangible book value, and for nine times the consensus 2013 EPS estimate of $7.02. The consensus 2014 EPS estimate is $7.38. The shares returned 38% during 2012, following a flat return in 2011. Capital One will report its fourth-quarter results after the market closes on Jan. 17, with the consensus among analysts being a profit of $1.62 a share, compared to EPS of $2.01 the previous quarter and 88 cents a year earlier. The third quarter was Capital One's first "clean quarter" of 2012, with the company reporting a strong return on average tangible common equity of 21.48%. The first and second quarters of 2012 were affected by numerous one-time items springing form Capital One's two transformative mergers. The company in February acquired ING Direct (USA), followed by a $1.25 billion common equity raise in March. Then in May, Capital One purchased HSBC's ( HBC) U.S. credit card portfolio for $2.5 billion. The ING deal included about $80 billion in deposits gathered over the Internet, along with $41 billion in loans, providing more than sufficient liquidity for the $28.2 billion in credit card loans acquired from HSBC. FBR analyst Paul Miller on Dec. 19 included Capital One among his list of "stocks to own for 2013," with a price target of $72, saying the company is "one of our favorite names due to its compelling valuation ($72 target = 10x our FY13 EPS estimate and 1.1x book value), expected resumption of the dividend, and increased earnings power." Miller estimates that Capital One will report fourth-quarter EPS of $1.71, and estimates the company will earn $7.15 a share in 2013, with EPS rising to $7.25 in 2014. COF data by YCharts
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