JP Morgan: The Best Value Play In Banking

Bobby is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

JP Morgan Chase (NYSE: JPM) has for a long time been a force to reckon with in terms of the impact that it has on the United States economy. This can be attributed to the fact that JP Morgan Chase has had a hand in a number of monumental deals that have seen the current state of the economy shaped from them.

Founded in the year 2000 after a merger between Chase Manhattan bank and JP Morgan, it has been able to define every aspect of the word prosperity. Its involvement in the availing of various aspects of day to day needs such as consumer banking, credit cards and mortgage loans has been perhaps what has been truly behind this multinational company’s success. With JP Morgan Chase share price trading at around $45 compared to Citigroup (NYSE: C) which presently stands at about $34, analysts have been keen to state that it is holding its ground well against its major competitor.

Regardless of this fact, Bank of America (NYSE: BAC) and Barclays have been showing steady signs of growth with a recent 1.5% and 5.6% increase in share price respectively. This can be attributed to key strategies in both houses have been implemented to ensure the attainment of a higher market capitalization. Wounded giant Goldman Sachs (NYSE: GS) still limps behind following the effects of the 2008 banking crisis but is a threat that should not be underestimated by JP Morgan’s board.

JP Morgan Chase maintains an overall lead when it comes to presence in the market as it holds a market cap of about $168 billion and it is closely followed by Citigroup at $100 billion. Despite the fact that Barclays has shown the most increase in its share price, their market capitalization tells a different story as it is almost a quarter of JP Morgan Chase’s at about $43 billion.

As a result of the pending predicament that Barclays is bound to find itself in with insurance, their stock is bound to take a hit which will be good news for JP Morgan Chase’s shareholders. JP Morgan Chase is considered to be the biggest bank in the United States in terms of the assets it holds since it amounts to about $2.3 trillion followed by Citigroup’s $1.9 trillion a fact that investors should keenly make a note of. Any level headed investor should be excited to get some of this action.

Calm Waters for JP Morgan Chase?

Despite the seemingly smooth road that JP Morgan Chase has been on, it has also had a share of its problems. A lawsuit that was brought against it recently by two brokerage firms claiming that it charged veterans hidden fees in the refinancing of their mortgages has seen their stock price plummet even though only a bit. Shareholders who had been eager to receive news on the ruling of this case however did not have to wait for a long time as the court gave a clear and decisive ruling on the matter. JP Morgan Chase was forced to pay out $45 million in order to settle the lawsuit. When asked for comments the management opted to remain silent but reports that were in circulation stated that it was experiencing just what ineffective litigators could cause it.

For shareholders who may be wondering when the light at the end of the tunnel will come into view, their wishes will be fulfilled faster than expected. The move by an investment fund affiliated with to take up a stake in Conduit will inevitably result in an increase in the share price of JP Morgan Chase‘s stock price. The investment fund will pay $100 million in order to acquire a 7% percent holding of the Israeli based internet firm. With an estimated 250 million users, Conduit is bound to be one of the greatest additions to the portfolio of JP Morgan Chase. Conduit targets the internet community through developing a variety of social networking tools and add-ons a niche that is proving to be quite profitable.

With reports from different quarters indicating that the housing market is gradually stabilizing and even showing signs of recovery from its previous slump, this is no doubt extremely good news for JP Morgan Chase. This is because the major source of their revenue is from home mortgages and with the impending recovery, revenues are also bound to follow suit.

Personally, this revelation has been a motivating factor in my choice to invest with JP Morgan Chase. Keen market analysts are predicting that JP Morgan Chase’s operating margin will increase from its present 24.13% if things continue the way they are going. In order to give those who may be having doubts as to whether the current standing of JP Morgan Chase will remain as it is, it is important to look at the strong messages that the management has been sending out to all the stakeholders. Through its aggressive marketing and taking carefully calculated risks in its acquisitions, it has proven that it is extremely committed to ensuring that JP Morgan Chase remains a leader in banking throughout the world.

In conclusion, I would encourage any investor looking to get the best value for their money with their investment to take up JP Morgan Chase’s stock. Not only are predictions of its expected growth quite enticing but the fact that it has also played a key role in ensuring that a number of ventures did not go under in the recent economic crisis has also proved that it is a capable firm that warrants the faith of all of its shareholders. 

BobbyFisher has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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