We recently compiled a list of the 7 Undervalued Blue Chip Stocks To Buy Right Now. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other undervalued blue chip stocks.
Kristen Bitterly, Head of Global Strategy at Citi, recently appeared on CNBC’s Squawk Box and explained how inflation and employment trends played a role in recent decisions from the Fed. Bitterly stated that while they had anticipated a 25-basis point rate cut due to some sticky inflation data, especially around the owner’s equivalent rent, she noted that the difference between a 25 or 50 basis point cut shouldn’t be overanalyzed. What matters most is the overall trajectory of rates moving forward, and as long as employment data remains stable, the Federal Reserve and the market are aiming for a soft landing.
Discussing rate cuts during a time of record stock market highs and low unemployment, Bitterly acknowledged the unusual timing. Typically, rate cuts happen during crises; however, she suggested that the Federal Reserve may be trying to stay ahead of a potential slowdown. She highlighted that the Fed’s main focus is on employment and price stability, not necessarily on stock market highs. Now that inflation is somewhat under control, the focus has shifted to keeping unemployment around 4%.
When asked about potential inflation risks, Bitterly mentioned ongoing infrastructure, CHIPS Act, and IRA spending, which could indeed lead to inflationary pressures. While the Fed’s projections may be too optimistic about inflation falling to 2.5%, she pointed out that we’re dealing more with disinflation rather than deflation.
“When we look at the Statement of Economic Projections, you might be right—they could be too aggressive in predicting where inflation will be. It might hover around 2.5%, and that could be sustainable in the near future. We’re not talking about deflation, just disinflation. The price increases we’ve seen are still there, even if inflation is coming down.”
On the strength of retail sales, Bitterly highlighted a strong economic backdrop, noting $6.5 trillion in money market funds, decreasing inflation, and record profitability among U.S. companies. Despite concerns like election volatility, she believes there’s still significant capital looking to enter the market, making for a favorable outlook. Bitterly predicted that the S&P 500 would likely finish the year higher, although October might be challenging due to election-related uncertainty. Historically, election years see a dip in October as investors take profits, but a rally usually follows once election results are clear.
Looking ahead to next year, she expects a return to fundamentals. With 10 out of 11 sectors anticipated to show earnings growth this year, and possibly all sectors growing in 2025, she emphasized that tariffs and taxation are important factors, but ultimately driven by policy rather than politics.
“Next year, we return to fundamentals. After the election, we focus on fundamentals. This year, we expect 10 out of 11 sectors to show earnings growth, compared to 7 out of 11 last year, which was an earnings recession. It could be 11 out of 11 going into 2025. On the election front, people are looking at tariffs and taxation, but policy drives that more than politics.”
Our Methodology
In this article, we screened for large to mega cap stocks that were trading at a forward P/E of less than 20. We identified 20 blue chip stocks that met our criteria and then selected the stocks that were the most popular among elite hedge funds, as of Q2 2024, and that analysts were bullish on. The stocks are sorted in ascending order of their upside potential, as of September 24.
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)
Analyst Upside Potential: 4.73%
Forward P/E, as of September 24: 12.47
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) ranks 7th in our list of the 7 undervalued blue chip stocks to buy right now. Despite a slight uptick in credit losses, JPMorgan Chase & Co. (NYSE:JPM)’s diversified operations across consumer and commercial banking, investment banking, and asset management provide multiple avenues for growth. Its leadership position in global banking ensures it remains resilient even amid economic uncertainties.
JPMorgan Chase & Co. (NYSE:JPM)’s significant market capitalization of $600.1 billion and a forward P/E ratio of 12.47 suggest that it is well-positioned for continued expansion and value creation. As interest rates stabilize and economic conditions improve, JPMorgan Chase & Co. (NYSE:JPM) is likely to benefit from increased lending activity and operational efficiencies. Additionally, its strong balance sheet enables it to invest in growth initiatives and adapt to changing market dynamics, making it a solid investment opportunity with significant upside potential.
JPMorgan Chase & Co. (NYSE:JPM) delivered strong Q2 2024 results, with a 15% jump in net interest income due to favorable interest rate conditions. The acquisition of First Republic Bank further bolstered its market position, particularly in wealth management.
While there has been a slight rise in credit losses, JPMorgan Chase & Co. (NYSE:JPM)’s diversified business model across consumer and commercial banking, investment banking, and asset management provides it with multiple growth avenues. Its leadership position in global banking and financial services ensures continued growth even amid economic uncertainty.
Overall JPM ranks 7th on our list of the undervalued blue chip stocks to buy right now. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that under the radar 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.
