Several financial stocks are drawing attention for their ability to combine earnings resilience with long-term growth, even as consumer credit conditions tighten and regulatory scrutiny remains elevated. Payments, lending and instalment-based financing continue to shape opportunities across the sector.
BNN Bloomberg spoke with Moshe Orenbuch, analyst at TD Cowen, who highlighted Capital One Financial, Synchrony Financial and Affirm Holdings as financial names benefiting from capital efficiency, partner-driven growth and improving profitability trends.
Key Takeaways
- Capital efficiency and excess capital deployment are increasingly important drivers of earnings growth in consumer-focused financial stocks.
- Retail and platform partnerships can provide steady revenue growth and partial downside protection during economic slowdowns.
- Exposure to payments, auto lending and consumer credit continues to support secular market share gains.
- Buy now, pay later models with expanding in-store capabilities may unlock a new phase of volume growth.
- Cost discipline and fixed-rate lending structures are improving profitability visibility across parts of the financial sector.
Read the full transcript below:
ANDREW: Time for Hot Picks. Our guest has Capital One Financial as his top idea and says its acquisition of Discover Financial Services will continue to add to earnings power. Let’s get more from Moshe Orenbuch, analyst at TD Cowen. Thanks very much for joining us. We appreciate it.
Start with Capital One. We know it as a major card issuer. Why does this stock check the boxes for you?
MOSHE: Thanks, Andrew. Capital One has long been known as a major credit card player. Over the past decade, following a series of bank acquisitions and significant investments in technology, its returns lagged some peers.Post the Discover acquisition, we see meaningful upside. Beyond the ability to grow faster using the Discover brand, the bigger driver is capital optimization. Capital One can lift returns from the mid-teens to 20 per cent or higher, which is the most important valuation driver for financial services companies.
The company announced a US$16-billion buyback and has roughly US$17 billion in excess capital, so there is further capacity there. As 2026 progresses, we also expect Capital One to use the Discover brand more aggressively to drive top-line growth.
ANDREW: Just quickly, and apologies for time, what is their business model? Do they issue Visa cards?
MOSHE: Capital One is one of the largest issuers of Visa and Mastercard products in the United States, measured by balances. It is also one of the largest auto lenders and operates a banking business. Cards are what it is best known for, in part because of its heavy advertising, but the business spans all three areas.
ANDREW: Turning to Synchrony Financial, remind us what it does and what attracts you to the stock.
MOSHE: Synchrony is a private-label and white-label card issuer that partners with major retailers and platforms such as Walmart, PayPal and Amazon to lend to their customers. It is the largest player in that niche.
What we like is that pricing changes and the renewal of its Walmart partnership should drive accelerating growth in 2026. We forecast about seven per cent revenue growth, and the stock remains relatively inexpensive.
ANDREW: And finally, when shopping online, many consumers now see offers to pay in instalments. Klarna is well known, but Affirm operates in a similar buy now, pay later space.
MOSHE: That’s right. Affirm is seeing roughly 30 per cent growth in both volume and revenue, making it the fastest-growing name we cover. Beyond that momentum, it has issued nearly three million Visa cards, a figure that continues to grow.
This allows customers to use Affirm both online and in-store, which we see as the next major leg of growth. The stock is not cheap, but it represents a compelling long-term growth opportunity.
ANDREW: How does the buy now, pay later model work? Is it similar to a credit card where costs can rise sharply if payments are missed?
MOSHE: Affirm is very clear on this. Loans are fixed-rate, and customers are never charged more than the agreed amount. Interest applies only to the borrowed balance, which amortizes over a fixed term. That structure is designed to avoid the cycle of debt often associated with credit cards.
ANDREW: So it doesn’t balloon the way credit card balances can, even if rates are high.
MOSHE: Exactly. Rates can exceed 20 per cent in some cases, but they apply only to the original amount borrowed and decline as the balance is paid down over a set period.
ANDREW: Fascinating. And it’s clearly becoming more prominent in online shopping.
MOSHE: Yes. E-commerce is large and growing, but in-store commerce is significantly larger. As Affirm increases card issuance beyond the roughly 2.8 million outstanding as of Sept. 30 and deepens in-store penetration, we see another growth leg emerging.
ANDREW: Moshe, thanks very much for your time. Moshe Orenbuch is an analyst at TD Cowen.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
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| COF NYSE | N | N | N |
| SYF NYSE | N | N | Y |
| AFRM NASDAQ | N | N | N |
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This BNN Bloomberg summary and transcript of the Jan. 8, 2026 interview with Moshe Orenbuch are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
