We are buying 50 shares of Capital One Financial at roughly $162. Following the trade, Jim Cramer’s Charitable Trust will own 500 shares of COF, increasing its weighting to 2.75% from about 2.45%. Shares of Capital One are slightly lower on Monday despite clearing a major regulatory hurdle last Friday. The company announced the Fed and the Office of the Comptroller of the Currency approved its pending acquisition of Discover . The deal is now expected to close on May 18. The stock is being dragged down with the rest of the market on continued fears of an economic recession. Although Capital One has risks in a slowdown, this transformational deal catalyst will support earnings growth and price-to-earnings multiple expansion over time. As we discussed on our March monthly cal l, there are a lot of reasons to like this deal. The clearest strategic advantage is that Capital One will own the Discover Global Network, which it will scale up and become a vertically integrated global payments platform. By owning a network, Capital One will decrease its reliance on Mastercard and Visa , lowering what it pays out in fees. And by having a direct relationships instead of dealing with intermediaries, Capital One can create more value for merchants, small businesses, and consumers. At the time the deal was announced, Capital One said it expected to generate $2.7 billion in expense and network synergies by 2027, further supporting long-term earnings-per-share upside. When the company reports after the closing bell Tuesday evening, we’ll look for management to provide an updated figure and timeline around those synergies. Lastly, the acquisition strengthens the company’s balance sheet and should allow for significant share repurchases over time. (Jim Cramer’s Charitable Trust is long COF. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A trader reacts after the closing bell on the floor at the New York Stock Exchange on April 15, 2025.
Brendan McDermid | Reuters
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