We recently published a list of 10 Cheap NYSE Stocks To Invest In Now. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against other cheap NYSE stocks to invest in now.
The stock market appears poised for another year of impressive returns, likely extending into 2025. However, concerns about high valuations persist. To gain insight into this, Aswath Damodaran, professor of finance at NYU Stern School of Business, recently joined CNBC’s ‘Closing Bell’ on December 14. Damodaran recognized that it’s tough to keep up after two years of returns over 25%. He mentioned that if the market stays stable until the end of the year, it would be similar to the high points seen in the 1950s and mid-1970s. However, he was doubtful about being able to keep this strong performance going, as it’s challenging to continue rising after such big gains.
When asked if the market is overvalued, Damodaran said that while prices are high, they haven’t reached the level of a bubble yet. He compared the current situation to the late 1990s but clarified that he doesn’t plan to sell all his investments. Instead, he is hesitant to invest cash right away because staying in cash might mean losing out on potential gains. He also mentioned that while there may be limited growth in price-to-earnings ratios in 2025, there could still be good returns due to better-than-expected earnings growth from new government policies. Damodaran believes that a return of 8% to 10% would be satisfactory for him, as he prioritizes preserving wealth over aiming for very high returns.
The US stock market currently presents a mixed valuation picture. According to Morningstar, Large growth stocks have experienced significant price appreciation. However, their current valuations may not fully reflect the inherent risks associated with high growth expectations and potential competition. Consumer defensive stocks tend to be less volatile during economic downturns, but the current valuations may be inflated due to a perceived safe-haven status. Utilities may be currently overvalued relative to their historical performance and future earnings potential as interest rates rise. The industrial sector may be overvalued due to concerns about potential economic slowdowns and rising input costs, although some sub-sectors may offer value.
Conversely, the communication services sector may present attractive opportunities for investors. While facing challenges such as increased competition and regulatory scrutiny, certain companies within this sector may be undervalued relative to their long-term growth prospects. The energy sector has experienced significant volatility in recent years. However, with increasing global energy demand and ongoing geopolitical uncertainties, certain segments of the energy sector may be undervalued at current prices.
Markets are constantly evolving, influenced by various factors such as economic growth, interest rates, and geopolitical events. Damodaran’s insights reflect a cautious view of market prospects heading into 2025, emphasizing careful investment strategies amid high valuations.
Methodology
We sifted through the Finviz stock screener to compile a list of the top NYSE-listed stocks. We then selected the 10 stocks with a forward P/E ratio under 15 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 Q3 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)
Current Forward P/E as of December 16: 14.33
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is a global financial services firm that provides a comprehensive suite of banking, investment, and asset management solutions to a diverse client base, including individuals, corporations, and governments. Recently, the bank solidified its position as the largest US retail deposit bank for the fourth consecutive year.
The company’s Asset and Wealth Management (AWM) division generated $1.4 billion in net income with a pre-tax margin of 33% in the third quarter of 2024. This performance was underpinned by a 9% year-over-year revenue increase to $5.4 billion. This growth came as AWM attracted $72 billion in net inflows, with fixed income and equities leading the way. At the same time, higher average market levels positively impacted investment valuations and management fees. A rise in brokerage activity further enhanced AWM’s revenue stream.
The division experienced substantial growth in assets under management, reaching $3.9 trillion, a 23% year-over-year increase. This significant AUM growth was a direct result of both market appreciation and sustained client inflows, solidifying AWM’s position as a key driver of JPMorgan Chase & Co.’s (NYSE:JPM) overall success.
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 cheap NYSE stocks to invest in now. While we acknowledge the growth potential of JPM, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. 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.