JPMorgan Chase & Co. (JPM) Positioned for Sustained Success Amid Slight Rise in Credit Losses
We recently published a list of 8 Best Inexpensive Stocks To Invest In Now. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other best inexpensive stocks to invest in now.
Are Experts Already Looking Into 2025?
The recent market surge has raised concerns about potential market overvaluation. While the market has experienced significant gains, there are growing concerns about the allocation of capital and the potential for inflationary pressures. The market has witnessed a significant upward trend following the Fed’s rate cut, with major indices reaching new all-time highs. This surge reflects a combination of factors, including increased investor confidence and optimism about the economic outlook.
Investors are advised to carefully consider their investment strategies amidst the current market dynamics. While small-cap stocks offer potential growth opportunities, it is crucial to evaluate the broader market trends and potential risks. By understanding the market dynamics, investors can navigate the current landscape and make informed decisions to achieve their financial goals.
On top of economic uncertainty, the upcoming elections also drive analysts to become overly cautious as the market becomes more volatile in the short term due to confused investor sentiments. Tom Lee, Fundstrat Global Advisors managing partner and head of research recently appeared on CNBC and recommended investing in small-cap stocks and equities over bonds, as they offer better growth potential, as long as the election uncertainty remains. We went over his opinion in greater detail in our article about the 10 Best Young Stocks To Buy Now, here’s an excerpt from it:
“….Tom Lee explained that the Fed’s actions have initiated an easing cycle, which historically tends to yield positive outcomes for the market 3-6 months down the line. However, he cautioned that stock performance in the immediate future remains uncertain due to ongoing repositioning ahead of the upcoming election in 40 days.
….He noted that many wealth managers and family offices are hesitant to commit capital until after Election Day, preferring to wait until that event is behind them. He expressed optimism about a potential surge in stock prices following the election, stating that November and December typically see strong rallies in election years, especially when markets have already gained more than 10% in the first half of the year.
….He highlighted an upcoming Core Personal Consumption Expenditures (PCE) report expected on Friday, which could confirm that inflation is no longer a pressing concern…Regarding a comment on recent target adjustments for the S&P 500, mentioning Brian Belski’s increase of his target to the highest on Wall Street, Lee acknowledged the potential upside in the next 3-6 months, expressing skepticism about setting aggressive targets like 6,000 for the S&P 500 at this time due to current valuations not being particularly low and having already experienced significant gains.”
As more and more analysts suggest space for further rate cuts, Vance Howard, CEO and Portfolio Manager at Howard Capital Management predicts a rate cut in early 2025 due to falling inflation and historical trends.
Appearing on CNBC on September 25, Vance Howard discussed the outlook for the market and the economy as we approach Q1 2025. He confidently stated that another significant rate cut is likely, driven by data indicating a need for it, particularly as inflation begins to decline. Howard pointed out that historically, after the first rate cut, markets tend to rise, with a perfect record of being higher 7 out of 7 times following such cuts. He also noted that if the S&P 500 has already gained 10% in the first half of the year, there is an 83% chance of continued upward movement in the second half. Therefore, he advised investors to remain optimistic and not be overly distracted by current market noise.
When asked about strategies for setting up portfolios in light of potential market volatility, Howard emphasized the importance of focusing on certain sectors. He highlighted utilities and real estate as promising areas, benefiting from falling interest rates. Howard expressed that reaching an all-time high in the market is a strong bullish signal and encouraged investors to buy on pullbacks.
Regarding specific sectors to watch, Howard identified financials as likely to strengthen following rate cuts. He explained that while financial stocks might initially dip after a rate cut, they typically rebound and continue to rise. Furthermore, he recommended staying invested in technology stocks.
Howard’s insights could potentially help investors navigate through potential market changes heading into 2025. By focusing on resilient sectors like utilities, real estate, and technology while considering strategic investments in convertible bonds and financials, investors may position themselves well for future gains.
Methodology
We used the Finviz stock screener to compile a list of 20 stocks with a forward P/E ratio under 20. We then selected the 8 best inexpensive stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Forward Price-to-Earnings Ratio: 12.48
Market Cap as of September 26: $598.27 billion
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is a finance company, the largest bank in the US overall, and the largest bank globally by market capitalization as of 2023. It is a leading global financial services firm that offers a wide range of products and services, including commercial banking, retail banking, investment banking, asset management, and treasury and securities services, operating in over 100 countries.
The company is making significant strides in automation. It has launched a GenAI assistant to streamline tasks for over 60,000 employees. For customers, it has introduced in-store pay-by-face biometric payment solutions and a new data-managed service for institutional investors to streamline their operations.
Q2 2024 revenue was up 21.53% year-over-year, with an earnings per share value of $6.12. Its commercial and investment bank segment revenue rose 9% year-over-year and delivered an 11% gain in net income. Asset and wealth management contributed around $5.3 billion to the revenue growth.
As of March 31, it had $4.1 trillion in assets and $3.6 trillion in assets under management. Its future is looking at sustained success due to its cost advantages and strategic investments in organic growth. While credit losses have risen slightly, the company’s diversified business model offers multiple avenues for growth in consumer, commercial, investment, and asset management.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
Overall JPM ranks 2nd on our list of best inexpensive stocks to invest in now. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.