Opinions
Richard Fogler
JP Morgan Chase & Co
JPM-N
HOLD
Sep 11, 2024
Stock price when the opinion was issued
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Flagship US bank. Dimon has done a spectacular job. Pristine risk controls. Trading ~13x PE. Either #1 or #2 in all of its major businesses. Still growing and gaining market share. Core holding in any portfolio. Time is ripe to buy the best, you don't have to go down the food chain. Yield is 2.73%.
(Analysts’ price target is $266.16)Financial sector offers great promise, though it's reacted to current markets by pricing in a potential recession. Slower economic growth would not be good for banks. Absent a recession, with consumer confidence returning and unleashing M&A, the sector provides a good opportunity.
Don't value it on PE. Instead look at price to book, and it's expensive at 1.8x. Less expensive options include BAC and C.
Very efficient, with the lowest overhead ratio and highest ROE of all competitors. Very strong balance sheet, and it's very liquid. Should outperform peers in any type of economic environment. Stock's pulled back on tariff uncertainties about 17% from its highs, now trading ~12.5x forward PE. Increased dividend last week. Yield is 2.42%.
(Analysts’ price target is $257.89)
Owns both, for different reasons.
JPM is the best bank in the US, perhaps the world. Jamie Dimon is the smartest banker around, and has his own money invested in the bank. Management has a deep bench. Not cheap, but he's not selling. Might grow 12-15% a year.
Citi is a turnaround, trades below book value. Most of the others trade at a premium. Owns a number of great, capital-light businesses. Doing a good job getting out of the morass of last 15 years. Doesn't usually buy turnarounds, but at 1/3 book value it was too cheap to pass up. Looking for a double in the next 3 years.