We recently published a list of 15 Best Stocks to Buy According to Hosking Partners. In this article, we are going to take a look at where JPMorgan Chase & Co (NYSE:JPM) stands against the other best stocks to buy according to Hosking Partners.
Hosking Partners was established in 2013 by Jeremy Hosking as an independent partnership that offers a single global equity strategy. The firm appeals to investors seeking long-term returns and innovative thinking employing a capital cycle approach to investing. It has a diverse set of stocks in its portfolio that belong to a variety of industries consisting of AI, shipping, and financial services, among others. Jeremy Hosking earned an MA from the University of Cambridge, after which he served Marathon Asset Management 26 years as a founding partner and lead portfolio manager. There he contributed to developing the capital cycle approach to investment.
In its recent blog about shipping, Hosking Partners believes that understanding the cycles in different classes of shipping and global trends is essential for successful investment in the industry. Currently, Shipping (covering the container, dry bulk, product tanker and LNG sub-sectors) represents 1.25% of the portfolio. Global trade has declined as a percentage of GDP since 2010 caused by deglobalization, accelerated by the COVID-19 pandemic and geopolitical instability from the Russia-Ukraine war. This trend, coupled with the energy transition, is expected to constrain future supply and increase commodity price volatility, benefiting shipping by enabling cross-border trade.
Furthermore, shipping is a significant emitter of CO2, accounting for about 3% of global emissions. Environmental regulations aim to reduce emissions, but uncertainty over future fuel technology deters investment in new ships, leading to a tighter supply. The industry’s efficiency, measured by emissions per tonne-km, remains high compared to other transport modes. The shipping industry is at a pivotal juncture, with significant transformations driven by AI, the energy transition, and ESG considerations.
Another industry that Hosking Partners talks about is copper mining. Copper is often seen as a barometer for economic health and is crucial for the energy transition, including electric vehicles, power grids, and wind turbines. Wall Street banks are optimistic about copper prices, forecasting significant gains. Citi analysts suggest that prices could surge to over $15,000 per ton in the next 2-3 years if a strong economic recovery occurs, while their base case projects a rise to $12,000 per ton with modest demand growth through 2025 and 2026. Bank of America has also increased its 2024 copper price target to $9,321 from $8,625, citing tight mine supply and high demand driven by the energy transition as key factors.
However, some experts are cautious. Colin Hamilton of BMO Capital Markets argues that commodity markets tend to self-correct, and if supply issues persist, demand may adjust, potentially leading to lower prices. Hamilton suggests that while high price targets might be temporarily achievable, adjustments in demand could follow. The market may see a modest surplus due to increased mined supply, which is projected to grow by 4-4.5%. This is largely driven by new greenfield and brownfield projects. Despite the near-term surplus, long-term scarcity is anticipated as regulatory and political challenges in South America could impede the development of new mines.
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A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co (NYSE:JPM)
Hosking Partners’ Stake Value: $52,396,262
Percentage of Hosking Partners’ 13F Portfolio: 1.93%
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co (NYSE:JPM) is an American multinational financial services corporation serving millions of consumers, small businesses and corporate, institutional, and government clients in the US and around the world. It is one of the largest banks in the US by customers. On August 9, CNBC reported that JPMorgan Chase & Co. (NYSE:JPM) has launched a generative AI assistant, named LLM Suite, that is already supporting over 60,000 employees in various tasks such as drafting emails and compiling reports. This initiative marks the first step in a larger plan to incorporate AI technology throughout the bank’s operations to enhance productivity while ensuring data security. The LLM Suite has been designed to be a portal to utilize external large language models. It has been launched with ChatGPT maker OpenAI’s LLM. JPMorgan Chase & Co. (NYSE:JPM) is leveraging AI for diverse applications, from marketing content creation to fraud prevention in its global payments sector.
Currently, it operates globally in sectors including Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Recently, Piper Sandler maintained its Overweight rating and $220 price target for the bank following an optimistic revenue update for Q2 2024. Co-CEO Troy Rohrbaugh shared revised revenue guidance for investment banking and markets segments at an industry conference, leading Piper Sandler to raise its EPS estimates for 2024 from $16.76 to $16.95 and for Q2 2024 from $4.54 to $4.63. Analysts have a positive outlook on JPMorgan’s financial performance, expecting a stable ROTCE target of 17% and projected Net Interest Income of around $91 billion for 2024.
Jim Cramer is optimistic about JPMorgan Chase & Co (NYSE:JPM) stating in a recent program that he believes the stock could reach a $1 trillion market cap. He praised JPMorgan as one of the “best banks in the world” and noted that it sells at only 12 times earnings. Cramer emphasized that this multiple is significantly lower than the average stock in the S&P 500, indicating that the stock is undervalued.
Overall JPM ranks 14th on our list of the best stocks to buy according to Hosking Partners. 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.
