JPMorgan Chase Stock (JPM): Is It A Good Buy?
Like every other avenue of life, the COVID-19 pandemic affected the stock market immensely. Although the pandemic battered many stocks, the banking industry saw a spike in value. One of the top performers in the industry is the JPMorgan Chase Stock, ticker symbol JPM
Recently, the Federal Reserve hinted that it would end the economic aid measures put in place during the pandemic more quickly than previously anticipated. At the same time, the Reserve may also raise its key interest rate next year.
The Federal Reserve cited ” inflation developments” in the labor market when saying that the bond purchases would go down by $30 billion a month. At this pace, the economic aid measures will wrap up by March. That is much sooner than the previously expected program wrap-up date in June, as per the Federal Reserve’s announcements. The decision to end these measures pre-term has come in the wake of rising gas prices, rising wages and a massively affected supply chain.
Amidst all of this, is Chase stock still a good buy? Should you invest in the stock, considering the looming fear of sky-high inflation in the coming year? Here’s a look at JPMorgan Chase stock and if it’s a strong investment choice.
Overview of JPMorgan Chase
The largest bank in the U.S., JPMorgan Chase has always been an attractive prospect for investors. The bank’s stock, Chase stock, outperformed all its competitors — even during the pandemic — while the price of some other banks’ stocks went down in double digits.
JPMorgan Chase finished the year with $30.2 billion in net revenue and a net income of $12.1 billion, 29% more than the fourth quarter in 2019.
Apart from top-notch performance, another thing that makes JPMorgan Chase stand apart from other banks is the “fortress balance sheet,” which is a phrase the bank’s CEO uses to describe the bank’s focus on capital strength.
How Much Is the Chase Stock?
The current value of the Chase stock is $157.98 as of Dec. 27, 2021. There has been a 0.43% increase in the stock’s price in the last 24 hours. It has a market cap of 462.795 billion, whereas the one-year target estimated price for the Chase stock is $180.7 .
How Does the Federal Reserve’s Announcement Affect JPMorgan Chase Stock?
Considering the sooner rollup of aid measures by the Federal Reserve, there are two possibilities. As the Fed raises its interest rates, it would give banks like JPMorgan an opportunity to increase their interest rates, too.
In this way, the bank can make more profits by charging high interest rates on its offerings, like credit cards, automobiles and loans.
However, the Fed’s economic aid measures kept the economy afloat during the pandemic, ensuring that borrowing costs were low and money was infused into the economy. In the absence of these measures, there’s no sure way to say which way the economy would go — and it could go in the opposite direction.
Although JPMorgan is the biggest bank in the country by market value, its reputation has dwindled in the past few decades.
Chase Stock Analysis
Composite rating in the stock market refers to the rating of the company’s creditworthiness. The rating is a combination of the Industry Group Rank, Accumulation/Distribution Rating, SMR Rating and Relative Strength Rating of the company.
It is expressed in numbers, with one being the lowest and 99 being the highest. Most of this score’s weightage is one Relative Strength Rating and EPS Rank. The rating results from comparing the said stock with all other stocks in the trading country regarding fundamental and technical factors.
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A stock with a rating of 80 means it has outperformed 80% of all other stocks in the country. JPMorgan Chase’s composite rating is 71 and its EPS rating is 79, according to Investor’s Business Daily which isn’t exactly impressive, considering the bank’s scope .
Meanwhile, an SMR Rating combines a company’s sales rate growth over the past three quarters. It also considers the pretax and after-tax profit margins. JPMorgan Chase Stock has an SMR Rating of C, with A being the highest possible rating on the scale.
Is JPMorgan Chase Stock a Good Stock To Buy?
Despite the Fed’s announcement, there’s no reason to doubt the potential of the Chase Stock. JPMorgan Chase is set to enter the new year with hopes for even higher profits than last year. Part of this financial success can be attributed to the bank’s diverse revenue streams.
JPMorgan Chase earns its revenue through four sources: commercial banking, corporate and investment banking, consumer and community banking, and wealth and asset management.
The consumer banking sector brings in most of the bank’s revenue, whereas investment banking comes second. Although the banking sector struggled during the pandemic, the world is gradually going back to normal.
Additionally, JPMorgan Chase has a solid balance sheet, which will likely become even more impressive once the company starts investing in technology infrastructure to improve performance and efficiency. The bank has also shown interest in acquisitions, after an agreement to acquire OpenInvest, a key player in the asset management space. That could also boost the stock’s price in the coming year.
All in all, the Chase stock is a good buy right now. But investors should be wary about the bank’s CEO, Jamie Dimon, showing concern about the “fat tail of inflation” that is likely to rise by 30%. He also said that inflation could rise higher than what people are expecting. However, he assured shareholders that the bank had positioned itself to tackle this concern.
Good To Know
Despite Jamie Dimon saying that JPMorgan Chase is equipped to deal with inflation, investors need to know the possible impact of inflation on banks. As inflation puts pressure on the economy, the central banks raise the federal funds rate. As a result, banks increase interest rates. Higher rates could lead to fewer loan originations. It also hurts borrowers who have variable interest rate loans. Together, these elements can affect a bank’s liquidity, capital levels and revenue, leading to a drop in the stock price.
Data is accurate as of Dec. 27, 2021, and subject to change.
Editorial Note: This content is not provided by Chase. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Chase.
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- The New York Times. 2021. "Stock Market's COVID Pattern: Faster Recovery From Each Panic."
- Barron's. "JPMorgan Chase & Co. Stock Overview."
- CNBC. 2021. "Fed Will Aggressively Dial Back Its Bond Buying, Sees Three Rate Hikes."
- Yahoo Finance. "JPMorgan Chase & Co. (JPM) Stock Price, News, Quote & History."
- Investor's Business Daily. "J P Morgan Chase & Co Stock Quote: JPM Stock News, Quotes."
- Insider Intelligence. 2021. "JPMorgan Chase Revenue By Segment (2021)."
- JPMorgan Chase. 2021. "Annual Report 2020."