JP Morgan Chase & Co (JPM)

An absolute profit juggernaut. Makes more money in a year than, he believes, all 6 Canadian banks put together. It is going to make an absolute fortune with the flood of IPOs that we are seeing right now. Thinks they have put most of their legal and regulatory woes behind them, which means that the drag on profits from the fines is over. All the US banks took tremendous reserve hits after the housing bubble because all of the houses had no equity or equity inadequacy to justify the mortgage. Every month that house prices go up in the US, currently up about 12% year-over-year, we are seeing most homeowners coming back into the black.

(Market Call Minute) There are other more attractive financial companies.

(Top Pick Feb 14/13, Up 17.90%) They are in the right group and have some very good assets so should do very well. Thinks you will see better than average dividend growth over the next 3 years.

ZWB is still your best way to play banks considering its covered call overlay. Over 5 years the US banks probably have more upside than Canadian Banks, but more volatility over the next 2. You need to decide if you want dividend safety and so on before making a decision. JPM will trade like the S&P and chop around.

With the Cdn$ at $0.90, he would rather buy a Canadian bank. Currency has swung too far. However, he sees nothing wrong with buying this. Stock will earn well over $6 a share. Thinks all the bad stuff is behind it. Valuation is ridiculously cheap compared to other sectors and to how well their balance sheet has improved.

This is going to be sensitive to the US and global economies capital market activities. A decent play. (See Top Picks.)

This and Goldman Sachs (GS-N) are going to do very well over the next little while. They are not expensive. Have cut their costs way down. A lot of these companies are flush with cash so there is going to be more M&A that is going to go one. Trading at 11X estimated earnings, which is not expensive.

(A Top Pick Jan 28/13. Up 27.49%.) Sees nothing wrong with this stock. There are other cheaper financials, but this will still have good gains 3-5 years from now. (See Top Picks.)

Record earnings, yet paying out all these fines. The issue has been litigation over the last couple of years. The money was already set aside to pay the fines. The market was already expecting them, so that’s why the stock can go up when the fine is announced. The fines are in the past. He looks at the future. He wants exposure to an improving economy, e.g. through their loans, investment banking and asset management. About 9 times earnings is too cheap in his opinion.

Cream of the crop in the US. Coming off of the financial crisis, he feels this one will do well. They did the best job of anyone getting through the crisis. They sold assets early.

Has been in the news, but not in a great way over the past several months. Anybody with any weight in terms of legal action, are taking a shot at them. Because of this, he would stay clear.

(A Top Pick Nov 1/12. Up 38.18%.) There have been higher bank valuations, strong credit growth, a recovery in the US housing market and they have strong management. Feels US banks still have upside to them on an earnings growth basis. Expects they will start to pay some dividends soon too. There is no reason not to own these money centered banks right now.

(A Top Pick Dec 3/12. Up 44.78%.) Valuation is still cheap. Thinks they will earn about $6 a share next year, so it is trading at less than 10X earnings. Feels the dividend is going to go higher. He is still Buying. He can see $72-$75 over the next 12 months.

Looked closely during the recession but chose others. Went up well after the recession so is not of interest to him now.

(Top Pick Oct 23/12, 29.12%) Still a core position. Lots of news on their litigation issues. They are benefiting from an improving housing market and economy in the US. People are optimistic about their earnings growth potential.