Jim Cramer Is a Big Fan of This Cheap Warren Buffett Stock — Time To Buy?

There are plenty of bargains to be had amid intense stock market volatility. And while the best deals have mostly evaporated, there are still intriguing, cheap names with timely catalysts that still look to be worth buying on the way up. In this piece, we’ll have a look at one such stock that Cramer has been pounding the table on in recent months, even after the April bout of turbulence we faced. 

Enter shares of Capital One Financial (NYSE:COF), a bank and credit card firm that’s been really gaining traction in the past two years, now up 121% over the timespan. With shares flirting with new all-time highs just north of the $200 per-share mark and the potentially needle-moving catalyst in the form of the Discover Financial (NYSE:DFS) merger, it’s hard not to be just a bit interested in the name while it’s going for just 16.5 times trailing price-to-earnings (P/E).

Also, Capital One isn’t just a name to receive Jim Cramer’s blessing, it also appears to have Warren Buffett’s gold stamp of approval, given it’s a holding in the Berkshire Hathaway (NYSE:BRK-B) portfolio as of the end of last year. Sure, it’s a relatively small (0.5% of the total Berkshire stock portfolio) holding, but one that mints COF as a Warren Buffett stock nonetheless.

A Discover merger could be a needle mover

I think Jim Cramer is right on the money to speak highly of the Capital One-Discovery merger. It’s definitely a move that could help the firm even out the playing field with the bigger players in the credit card scene. Of course, only time will tell if such a financial mega-merger will worry the credit card juggernauts as they pour considerable sums on agents to bring credit cards into the AI age.

At the time of this writing, shares of credit card market leader Visa (NYSE:V) boast a $682 billion market cap alongside a hefty 35.8 times trailing price-to-earnings (P/E) multiple. With a commitment to spend on high-tech and fraud detection, I’m more inclined to think of Visa as more of a fintech innovator than just a credit card company that’s content with sitting comfortably on its big market lead.

As the credit card leaders stay on their toes, I’m not so sure about Capital One’s prospects post-merger, as it’s going against some proven heavyweight champs. Of course, I do agree that the merger with Discover is a huge positive that could unlock significant value for shareholders.

Personally, I’d much rather wait and see how things pan out in the coming months and quarters as the $35 billion merger moves forward. While COF stock is a heck of a lot cheaper than comparable rivals, with robust momentum following its latest standout quarter, the stock is hovering close to its highs after shrugging off most of the Trump tariff fears that rocked markets just over a month ago.

Analysts are fans of the name, too.

As the analyst upgrades continue flowing in, it’s hard not to feel a bit tempted to purchase a few shares before the full extent of the synergies can be better realized. Back in March, Evercore ISI analysts boosted their targets, citing the Discovery acquisition as one of the main reasons. Of course, there are also risks, especially if Trump tariffs spark a recession at some point over the next year.

As Trump tariff headwinds clear up and the market gets closer to the “boom” Trump previously predicted, perhaps COF stock is one of the names worth buying at a high point. The Discover deal is a timely catalyst and one that could go very right for a stock that still seems priced modestly. Though it’s too late to buy the dip, I’m certainly not against averaging into a position at just shy of $200 per share.