We are initiating a new position in Capital One Financial , buying 145 shares at roughly $179.84. In addition, we are buying 30 shares of Dover at roughly $187.37. Following the trades, Jim Cramer’s Charitable Trust will own 145 shares of COF with a weighting of about 0.75%. The Trust will also own 570 shares of DOV, increasing its weighting to about 3.05% from 2.9%. We’re making a couple of buys Thursday to take advantage of the ongoing oversold market. The S & P Short Range Oscillator, our trusted momentum indicator, stood at minus 4% even after Wednesday’s rally, meaning the market was still technically oversold. We are calling up Capital One Financial from the Bullpen, our watchlist of stocks. We added it in late January when the stock traded slightly above $200 per share. It’s pulled back about 10% since then, underperforming the S & P 500, which has declined nearly 5% in that stretch. Capital One is a financial services company known for being one of the largest issuers of credit cards in the U.S. In a market struggling to account for multiple uncertainties, we’re looking for individual catalyst events that can push stocks higher. Capital One checks that box. The company has a major catalyst scheduled for later this year with its planned acquisition of Discover Financial Services . The all-stock transaction — announced in February 2024 and valuing Discover at $35.3 billion — is expected to close in early 2025. It has received approval from the shareholders of both companies. However, there is still some risk around it since the deal is waiting for approval by the Federal Reserve and the Office of the Comptroller of the Currency, or OCC. This is a transformative deal for Capital One, helping it gain scale and move up the card issuer ranks to the top spot from No. 3. At the time of the deal announcement, Capital One said it expects to generate $2.7 billion in pretax synergies, and that would be more than 15% accretive to adjusted earnings per share (EPS) in 2027. That’s quite meaningful for a stock that currently trades at 8 times its current 2027 adjusted EPS consensus estimate. On Feb. 19, analysts at Bank of America upgraded Capital One to a buy rating from hold and upped their price target to $235 a share from $207. The analysts said there were “catalysts galore” in the short term that could help propel the stock. “A combination of improving credit trends, pending acquisition-related revenue, and expense synergies as well as the potential for increased capital returns provide a cascade of catalyst that should excite investors and can provide near-term upside to Street estimates,” the analysts wrote. Although the recent slowdown in the U.S. economy has raised some concerns about future credit trends —hence Capital One’s recent underperformance — we believe some of the sluggish consumer spending data has been skewed by bad weather. Case in point: JPMorgan’s retail analyst Matt Boss recently conducted an analysis of Chase card data, and found that in states where the weather was favorable to neutral, discretionary spending was unchanged versus November and December. In months where the weather conditions were extreme, there was a “notable deterioration,” the analysis found. We think this provides some validation to our argument that much of slowdown was tied to weather and not something structural. Longer term, Bank of America thinks the Discover deal “would fundamentally alter Capital One’s position in the payments ecosystem by granting it direct control over a closed-loop network.” This would improve Capital One’s offerings and allow it to better compete in the small business market and super-premium market, Bank of America says. As mentioned, the stock has been beat up lately on the concerns about the economy and the February jobs report due out Friday morning also may be rough. However, there’s currently a lot of negativity in the market, and if we start to see the data improve in the coming weeks then we would expect the stock price to recover too. Plus, we like having a big catalyst that will improve the company’s earnings power and competitiveness. We are initiating Capital One with a price target of $210 a share, which is slightly more conservative than the Wall Street consensus price target of $221, according to FactSet. That price is slightly above the stock’s closing high of $209.82 set on Feb. 19. As for Dover, we’re taking advantage of the stock’s recent weakness to top off the position toward 3%. Dover CEO Richard Tobin presented at the Barclays Industrial Select Conference on Feb. 20 and said the company’s strong fourth-quarter order trend continued into the first quarter. This positive indicator explained why the stock traded up about 0.75% on the conference day to $206.43 and outperformed the S & P 500’s 0.43% decline. But since then, Dover shares have pulled back about 9%. The recent weakness in the stock allows us to capitalize on that positive update from Tobin. Another thing we like about Dover in this environment is its optionality. The company ended 2024 with $2.8 billion of dry powder, which it can use to upgrade its portfolio into faster-growing, higher-margin opportunities or repurchase stock. (Jim Cramer’s Charitable Trust is long DOV, COF. See here for a full list of the stocks.) 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