Neutral - Price 35.01 on Sept. 2
by Sterne, Agee & Leach

Since the middle of July, the stock prices of consumer lenders have been on the rise, with COF outperforming its peers by a factor of greater than 1.9 to one. The stock is selling within 3% of the upper bound of our valuation range, and we believe a profitable September quarter -- not out of the realm of possibility -- could push the shares close to or above 40. [On a recent selloff, we're] changing our rating from Sell to Neutral. Market cap: $15.8 billion.

The banks? Crumbling? However, most of the crumbling stocks don't even trade. The ones that do are acquirers and they are going higher, not lower. Capital One (COF) says things are better; SunTrust (STI) says things are worse.

In an Aug. 21 blog post, Cramer wrote: "Capital One is up gigantically now, again after legislation that was supposed to kill it. Sign of peaking charge-offs."

And in an Aug. 7 post, he wrote:

"In fact, I would like to think that mortgages and credit cards are the only real problems, and I can't believe that Capital One, American Express or Target (TGT) -- all of which have seen stability for several months now -- are that much better at issuing cards than Citigroup (C)."

Remember that many of them had broken down to the levels where their secondaries had been put on or below them, with BB&T (BBT) and Wells Fargo (WFC) hanging by a thread and PNC (PNC) really breaking down. Not only that, we had Capital One (COF) getting crushed.

I think charge-offs are a problem for Bank of America (BAC), JPMorgan (JPM) and Capital One (COF), adds Tim Seymour. I’d be cautious of any bank that made their name on credit cards.

"Granted, other banks like Bank of America (BAC), American Express (AXP), JPMorgan Chase (JPM) and Capital One (COF) are feeling the squeeze as more consumers have trouble paying their bills." Read more here.

Capital One (COF) has never been in the black, but now you are being roasted alive on that one.

The idea of anyone defending these companies seems pretty daunting. I think that these stocks should be sold and sold now, as the rhetoric will only grow. If you want to see what can happen, take a look at Capital One Financial (COF), which was PENO last month.

Host Erin Burnett asked Cramer for his "biggest gamble" pick of 10 TARP repayers, and Cramer picked Capital One (COF). "The biggest high-risk/high-reward play in this group is Capital One," he said. It "could be a gigantic stock, if you believe, as I do, that the economy's not running off the rails." (Cramer's "Stop Trading!" 6-9-09)

Stock Wrap: The Real Story, June 9: Stocks in New York were slightly higher in the final hour of trading, with the Dow flirting with positive territory for the year, as oil climbed to $70 a barrel and investors mulled news that some banks are cleared to return taxpayer aid.
Click here to watch the video.

lousy

too uch credit exposure

to much exposure to credit card failures.

JUNK

credit card shake out

I can not get in time with it's moves.

haven't seen nothing yet in the way of losses yet to come

Financial

?

SAME REASON AS ABOVE