Waterworld Capital
Public Markets Commentary
Capital One's stronger credit and improved net-interest and non-interest revenue make its 9x earnings and 1.1x book valuation appealing for a quality card business with a global payments network. Operating expenses were in line. x.comÂ
Capital One's Discover integration is delivering scale that is paying off for shareholders, earning an A grade. Q3 net revenue rose 6% as interest income and fees climbed; despite a slightly higher credit-loss provision, net income rose 11% and continuing-operations EPS increased 16% to $5.62. x.comÂ
Better Home & Finance is now the favorite lending tech company, even over Upstart, though riskier because it is still very early. Its HELOC with a credit card turns home equity into a revolving credit line, making borrowers long-term customers and generating fees, and a Coinbase partnership lets borrowers use bitcoin or USDC as loan collateral. It grows at 40% yet trades at half Upstart's valuation, with fair value estimated at $40-50. x.comÂ
Citigroup's rally looks overdone. It is not a super-premium franchise, yet the stock has tripled since 2023. CEO Jane Fraser's plan is working and the shares were far cheaper than other money-center banks for the past decade, as @RAMCOCAPITAL notes, but the market seems to be making the wrong call on whether Citi is a credit card issuer or an investment bank and broker, though that view could be mistaken. x.com x.comÂ
Dave has the best valuation among online banking and consumer lending peers such as Affirm, SoFi and Ally, and its large base sets it up for a big breakout: the bigger the base, the bigger the breakout. x.comÂ
Credit-card stocks American Express, Visa and Mastercard are among the best values in the current market. American Express's latest earnings look pretty good, and the charts show plenty of upside potential. x.comÂ
Mastercard, AutoZone, Booking, Apple, Caterpillar, ADP and Fair Isaac are buyback machines, among the best stocks to own, because each has consistently reduced its share count. That raises each shareholder's ownership stake every quarter without lifting a finger. x.com x.com x.com x.com x.com x.com x.comÂ