I've got a high opinion of many of the five-star-rated financial services companies in our Motley Fool CAPS investor service, including Barclays (NYSE:BCS), Banco Itau Holdings (NYSE:ITU), and East West Bancorp (NASDAQ:EWBC). But my favorite financial stock for 2007 won't be found among the five-star stocks in CAPS -- at least, not yet.

Instead, I'm nominating Capital One Financial (NYSE:COF), upon which our CAPS community has only bestowed four stars thus far. True, Capital One has struggled to integrate its acquisition of North Fork Bancorporation. But its core credit and auto-lending businesses have performed well, and its global finance segment, where the company's international credit card business resides, has also recently performed much better.

Credit cards remain the heart of Capital One's business. The company has long focused on the subprime portion of the market, but in the last few years, it's begun targeting the prime borrower market as well. This puts it in competition with Citigroup (NYSE:C), American Express (NYSE:AXP), and Income Investor selection JPMorgan Chase (NYSE:JPM), to name a few. However, the company's statistical and information-based model has worked well for subprime borrowers, and it appears to be doing likewise in the prime market. Don't take my word for it -- read these pitches from just two of the more than 356 CAPS participants to assign Capital One an "outperform" rating.

GGGilmore says:

"I think this company has one of the best run credit card programs. They are more selective in who they give cards to, give a decent interest rate to the credit worthy, and have a rewards program that is nice but not a huge giveaway."

Randyriv says:

"Capital One is a company that is constantly misunderstood by the market. Place a moderate P/E of 12 based on 2006 earnings, and the stock should be worth at least $95 today. Factor in the fact that management at COF is superb and the company has consistently grown its earnings >15% every year of its existence, and its easy to justify a $100+ stock price in the near future."

Instead of the P/E method used above, I used a discounted cash flow analysis to value Capital One, and I'd conservatively peg the company between $88 and $95 a share. That depends on just how robust the company's growth will be in the next five to 10 years. The other companies I mentioned are great, and they should all do well. But investing is a blend of value and growth, which makes Capital One the only company among those I've listed here to earn a spot on my personal CAPS scorecard.

What do you think? Cast your vote in Motley Fool CAPS by tagging Capital One as an underperformer or an outperformer. Next week, we'll announce the community's pick for the best financial company for 2007, based on your responses.

See all of our Foolish candidates for the best financial stock, and add your own rating in Motley Fool CAPS.

At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. He was ranked 56th out of 20,856 CAPS investors. The Motley Fool has an ironclad disclosure policy.