We recently compiled a list of the Jim Cramer’s Game Plan: 12 Stocks in Focus This Week. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other stocks featured in Jim Cramer’s game plan.
Jim Cramer, the host of Mad Money, recently discussed some of the week’s important market events, focusing on earnings reports from different companies, including major banks and new data from the Labor Department.
Cramer expressed hope that the wildfire situation would bring some positive news. He acknowledged the challenges natural disasters bring, but pointed out that government and insurance companies are working to stabilize the situation. While Cramer made it clear that he doesn’t support exploiting tragedy for profit, he also noted that some retailers tend to benefit during such times as people begin rebuilding.
He mentioned that while some of these stocks have already seen gains, there may still be room for growth, especially as insurance payouts and government funds flow toward reconstruction efforts.
“How about the other side of the trade? Here I’m talking about earnings. Can great earnings triumph over a sour bond market? We’re going to find out for certain because this is a week we associate with bank earnings and there’s a lot of misconceptions about the banks. We know that when they make the wrong bets on the bond market, like two years ago, their stocks can take some real nasty hits. But when their bond portfolios are good, like they are today, they can withstand or even profit from higher rates so let’s not write these stocks off.”
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Regarding the JPMorgan Healthcare Conference, Cramer noted that this is a major event where nearly every drug and healthcare company presents updates. He expects some exciting developments, despite current economic conditions. However, he cautioned that drug stocks are still highly sensitive to interest rates, which, in many cases, are more influential than even a company’s pipeline or earnings. Cramer discussed the Producer Price Index (PPI) and the Consumer Price Index (CPI), which are scheduled for release on Tuesday.
“It needs to come in cooler if there’s any hope that interest rates could reverse and the Fed can regain some of its lost credibility, stemming from cutting in a hurry when we now know there was no need to do so. I think it’s possible that these numbers are gonna be cooler than the labor report, but not enough to justify our appeal of today’s losses.”
Wednesday’s market action would bring more attention to bank earnings, Cramer explained, noting that banks would likely receive an initial boost from higher interest rates, particularly through products like certificates of deposit, which offer lower rates than what banks can earn by investing in the bond market. While this provides a short-term benefit, it could make these stocks worth holding in the interim.
“Bottom line: If you’re a bull or at least trying to make sense of this market, well, you know a market that goes down on seemingly good news, all I can say is that the stock market that gets surprised may seem like it’s reacting inappropriately until you see its master, the bond market, explain everything by the direction of interest rates. For now, that’s the key determinant of the entire stock market, even as there are pockets of positivity that can escape the bond market’s tyranny.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 10. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
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
A slew of banks, including JPMorgan Chase & Co. (NYSE:JPM), will report earnings on Wednesday and Cramer commented:
“On Wednesday, we’re gonna hear from JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup. I think they’re all gonna be pretty darn good. Plus, given the environment has improved for mergers and acquisitions, as we’ve seen already this year, we gotta have some excellent forecast. I like these stocks and they’re well off their highs with very low price-to-earnings multiples. Could it be a real opportunity? I think so. We’ve been buying a bunch of them for the Charitable Trust because a robust economy often produces the best results for these companies. Regardless of the bond market or the Fed. We have less, fewer credit problems.”
JPMorgan (NYSE:JPM) is a global financial services institution that offers a range of services, such as deposits, loans, investment banking, and wealth management. As of the third quarter of 2024, its financial standing reflects a highly stable and resilient balance sheet. The bank reported an impressive total loss-absorbing capacity of $544 billion, complemented by $1.5 trillion in cash and marketable securities.
In comparison, its riskiest assets, including loans, were valued at $1.3 trillion. For the full year 2024, the company forecasts net interest income (NII) excluding markets to be approximately $91.5 billion, with total NII expected to reach around $92.5 billion. Additionally, the bank expects the 2024 net charge-off rate for credit card loans to be about 3.4%.
Additionally, JPMorgan (NYSE:JPM) has a significant presence in Japan, where it is among the largest foreign investment banks. As of December 2024, the company strengthened its position by appointing Satoshi Shimada from Bank of America to lead its mergers and acquisitions team in Tokyo. The move was made to take advantage of the surge in dealmaking activity in the country, driven by government initiatives encouraging companies to enhance shareholder value, a weak yen, and favorable borrowing conditions.
Overall JPM ranks 2nd on our list of the stocks featured in Jim Cramer’s game plan. 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.
