Remitly Global (RELY 8.57%) saw its stock price rise more than 35% in the past two weeks after it reported excellent fourth-quarter results.
The company, a leader in processing international money transfers, also provided an upbeat outlook, which put investors into buy mode for the cheap stock.
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Revenue in the quarter increased by 26% from a year earlier, send volume surged by 35%, and active customers rose by 19%. It also swung to a profit, with net income of $41 million compared with a $6 million net loss in the same quarter a year ago.
Its outlook for 2026 calls for 19% to 20% revenue growth, positive net income, and a 25% to 32% rise in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
NASDAQ: RELY
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All in all, it is a stock that should be on your radar. Wall Street analysts have an average price target of $21 per share, which would be about a 20% gain.
But here's another financial stock that has even more upside to also put on your radar -- Capital One Financial (COF 2.51%).
Merger fuels optimism
Capital One stock is down about 19% year to date, mainly due to concerns about potential regulation and legislation affecting credit cards. But I take a more bullish view of Capital One, stemming largely from its acquisition of Discover.
The acquisition, which closed last year, combined one of the largest credit card issuers with the Discover card payment network. The marriage of the two is expected to result in $2.5 billion to $2.7 billion in annual synergies, starting in 2027. That essentially means that the bank will see that much benefit each year between cost reductions and new revenue opportunities.
NYSE: COF
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Part of the revenue opportunities come from Capital One moving some of its popular credit cards, including Venture, Savor, and Quicksilver, to the Discover network to capture the entire interchange fee instead of sharing it with other networks. At the same time, it would save on fees paid to either Visa (V 0.81%) or Mastercard (MA 1.33%) for using their networks.
Once these synergies start kicking in, analysts expect revenue to increase 25% and earnings to surge 26% between now and the end of 2027.
If interest rates come down as many expect, it should help Capital One in the longer term, spurring more loan activity and improving credit quality.
Capital One stock is cheap
The other positive factor for Capital One is its low valuation. Although its current price-to-earnings (P/E) ratio is out of whack due to the high costs of combining and integrating the two companies, its forward P/E ratio is just 9, and its five-year price/earnings-to-growth (PEG) ratio is a minuscule 0.20. Anything less than 1 is considered value territory.
Wall Street analysts rate Capital One stock as a buy, with an average price target of $280 per share, which suggests about 42% upside during the next 12 months.
So although Remitly looks like a solid option for investors, Capital One appears to have more upside. It is transforming into a more diversified, all-weather stock compared to many of its peers -- and it is extremely cheap.
