The stock has dropped 27% since its high in early January, hitting fresh 52-week lows only this week after the business said in January that it will increase its IT investment by $2.4 billion to $12 billion this year. The banking sector behemoth also announced that it would cut back on stock buybacks in the coming year.
Furthermore, the Federal Reserve is about to begin raising interest rates in an effort to bring growing inflation under control and the danger of a recession deflates the bullish thesis for JPMorgan.
While the major bank and its shareholders have reason to be concerned, this does not mean that investors should avoid JPM. This company is currently too cheap to pass up at less than 10 times trailing earnings, regardless of what the near future holds.
With $2.6 trillion worth of domestic assets under its umbrella, JPMorgan Chase is the biggest bank in the U.S. It has broad exposure to the consumer, corporate and investment banking markets, as well as a respectable amount of exposure to the wealth-management industry. That diverse mix of profit centres wasn’t enough to prevent its recent stock price rout. Investors are simply too worried about what may happen to its businesses and those concerns are not completely without merit.
According to data provided by EY, the number of completed initial public offerings declined 37% year over year in the first quarter and the total amount raised fell by 51%. Meanwhile, according to the Mortgage Bankers Association, mortgage applications declined by 8% last week compared to the prior week. When the refinancing market is taken into account, mortgage applications are nearly half of what they were a year ago, falling to levels not seen since 2018.
There’s more to a business than just numbers. When the metrics for an established blue chip like JPM appears to be so wonderful because investors are more afraid than they should be, those numbers may be used to support a bullish argument. Whatever the case may be, you should consider investing in JPM sooner rather than later, since market downturn is forcing more investors to switch from growth companies to dividend payers like JPM.
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