We recently compiled a list of the 10 Best American Bank Stocks To Buy Now. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other American bank stocks.
2024 was a memorable year for America’s banking giants. According to a recent report in the Financial Times, the seven largest banks in the country represented 56% of the industry’s profits during the first nine months of the year, up from 48% during the same period in 2023.
READ ALSO: 10 High Growth Financial Stocks To Invest In and 10 Best Bank Penny Stocks to Buy According to Hedge Funds.
The banking sector is also experiencing improved capitalization. In November, the Federal Reserve Board found that 99% of the country’s banks reported capital above regulatory requirements. Moreover, the Federal Deposit Insurance Corporation (FDIC) noted a 3.5% increase in equity capital in Q3 2024, reflecting the upward trend in capitalization.
Globally, credit rating agency Moody’s upgraded the overall outlook for the industry from negative to stable in December for the first time since 2023, citing interest rate cuts and monetary adjustments being made by the G-20 countries. The Federal Reserve announced three cuts last year, lowering the central bank’s target interest rate to 4.25% and 4.5%.
Trump’s return to the White House has also raised optimism about lax regulations in the financial sector, which analysts believe can spur dealmaking activity in the banking sector. Reduced oversight and a business-friendly environment are also likely to boost revenue and loan growth, and subsequently improve banks’ bottom line.
The U.S. president has also repeatedly demanded further reductions to the interest rate. Here is what he said at the World Economic Forum in Davos on January 23.
With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world.
While the general outlook for the banking industry looks promising for 2025, analysts also warn of the potential risks associated with ongoing geopolitical conflicts, which can have adverse effects on the global economy. Increasing trade tensions and protectionist policies can also hurt investment inflows.
On January 31, the White House announced that President Trump would move ahead with his planned tariffs on Canada, China, and Mexico, starting February 1. The 78-year-old has also threatened to impose tariffs on the EU, citing the bloc’s treatment of the U.S.
“Am I going to impose tariffs on the European Union? You want the truthful answer or shall I give you a political answer? Absolutely. The European Union has treated us so terribly.”
Methodology
For this article, we sampled stocks from ETFs with exposure to American banking companies and our previous articles on the sector. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best American bank stocks to buy now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
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)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is an American financial services company that provides a range of investment banking and asset management solutions for a diverse client base. For the past four years, it has been the largest bank in the U.S. for retail deposits.
During its recent Q4 2024 earnings call on January 15, the company reported robust results, topping estimates for both revenue and earnings. The strong show was attributed to better-than-expected net interest income and strong investment banking results. JPMorgan Chase & Co. (NYSE:JPM)’s profits increased by 50% year-over-year to reach $14 billion.
The company also posted a record annual profit of $58.5 billion for 2024, which analysts have credited to an improving economy and a revival in deal-making activities in the sector as interest rates drop.
Looking ahead, JPMorgan Chase & Co. (NYSE:JPM) anticipates a boost in net interest income, with its projections for 2025 surpassing analysts’ forecasts. Mary Erdoes, the chief executive officer of JPM’s Asset & Wealth Management business, while speaking at the World Economic Forum recently expressed hope that Trump’s lighter-touch regulatory regime would further spur dealmaking in the American economy.
JPMorgan Chase & Co. (NYSE:JPM) is a generous dividend payer and distributed a common dividend of $3.5 billion or $1.25 per share during the recently concluded quarter. Given its solid financial position, analysts expect the company to continue sustaining strong shareholder returns. As a result, they have a consensus Buy rating for the stock. According to Insider Monkey’s database for Q3 2024, 105 hedge funds held a stake in the company, making it the best American stock to buy now.
Overall JPM ranks 1st on our list of the best American bank stocks to buy now. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher 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.
