We recently compiled a list of the 14 Best 52-Week High Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where JPMorgan Chase & Co (NYSE:JPM) stands against the other 52-week high stocks.
The U.S. stock market has been on a roll, with major indices clocking double-digit gains even with the U.S. economy showing signs of weakness. The gains have come from investors shrugging off the uncertainty around the U.S. presidential election and monetary policy to continue betting on various counters.
Consequently, the S&P 500 is already up more than 17% for the year, driven by gains in the communication services and financial services sectors. Likewise, technology stocks have also contributed to driving the overall market high as investors continue paying close attention to some of the big plays around artificial intelligence.
READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.
The tech-heavy NASDAQ index, which gained 18% for the year, comes on growing expectations that the U.S. Federal Reserve has hit the peak of its monetary policy tightening spree. With expectations that the central bank will start cutting interest rates by as much as 50 basis points, according to CNBC, investors’ sentiments around tech stocks have improved significantly for September.
Investors remain optimistic about the stock market outlook heading into year end because of the positive impact of low interest rates. The Fed’s cutting interest rates will result in a significant drop in borrowing costs, which bodes well for capital-intensive businesses looking to access cheap capital.
The central bank aims to achieve a soft landing for the economy. In this situation, inflation must return to the 2% goal without the U.S. economy sliding into a downturn. If the central bank reduces interest rates prematurely, it faces the danger of a severe surge in inflation. Conversely, if it reduces rates too late, it might cause a severe recession.
While interest rate cuts are expected to offer a much-needed boost, disappointing earnings, and lackluster guidance could curtail market gains, especially for the best 52-week high stocks to buy, according to short sellers.
Several companies are under immense pressure after their valuation skyrocketed amid the artificial intelligence frenzy. Consequently, any concerns about slow earnings and revenue growth should send jitters, triggering significant pullbacks.
Adam Turnquist, the head of technical strategy at LPL Financial, mentioned that the S&P 500 typically experiences about three annual declines of at least 5%. On average, it has seen around one 10% decline each year.
“Expressing this data another way, 94% of years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction,” Turnquist said, according to USA Today. “We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient.”
Looking forward to the rest of the year, experts predict that the best 52-week high stocks to buy, according to short sellers, could keep rising, but they caution about the dangers of premium valuations.
At the same time, financial experts believe that although economic expansion will slow down in the next few months, they don’t see a situation that could cause a recession.
Our Methodology
To compile the list of the best 52-week high stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week highs (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order based on their short interest.
At Insider Monkey, we are obsessed with 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)
52 Week Range: $135.19 -$222.21
Current Share Price: $221.29
Short interest rate: 0.89%
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is a financial services company that offers deposit investment and lending products. It also offers securities services, including custody, fund accounting and administration, and securities lending products for asset managers.
JPMorgan Chase & Co. (NYSE:JPM) is one of the best 52-week high stocks to buy, according to short sellers as one of the biggest banks with assets worth over $4 trillion. With operations in over 60 countries, it is one of the most diversified investment plays in the financial sector.
The financial services giant delivered solid second-quarter results, with revenues increasing 20% to $51 billion and net income up 25% to $18.1 billion. JPMorgan generated $2.3 billion in investment banking fees, as equities trading revenue jumped 21% to $3 billion on solid derivatives results. Fixed income trading jumped 5% to $4.8 billion, matching the estimate.
JPMorgan Chase & Co. (NYSE:JPM) is a solid financial institution that has significantly grown its investment banking division and consumer banking activities. Additionally, CEO and Chairman Jamie Dimon is managing a successful operation, achieving a substantial return on equity and return on assets. Its return on equity stood at 23% in the second quarter, while return on average tangible common shareholders’ equity (ROTCE) came in at 28%.
While rewarding shareholders with a dividend of $1.15 a share, it offers a dividend yield of 2.14%, which is much higher than the average yield of 1.58% for the S&P 500. Its annualized dividend of $4.60 is up by 13.6% for the year, affirming the company’s commitment to returning value to shareholders.
In the second quarter of 2024, JPMorgan Chase & Co. (NYSE:JPM) saw decreased interest from hedge funds, with 111 funds holding stakes, down from 112 in the previous quarter, according to Insider Monkey’s database. The total value of these stakes exceeds $6.98 billion.
Overall JPM ranks 7th on our list of the best 52-week high stocks to buy according to short sellers. 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 a promising AI stock 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.