JPMorgan Chase & Co. (NYSE:JPM) — This leading global financial services firm operates in more than 50 countries and had assets of $2.6 trillion at the end of the first quarter.
Following a better-than-expected Q1 earnings report in mid-April, S&P Capital IQ reiterated its “buy” rating on JPM stock and raised its 12-month target by $4 to $69.
Its analysts view the stock as low risk based on its strong capital ratios, well-reserved balance sheet and diversified products. Additionally, its geographic diversification should help it weather local and regional economic slowdowns.
Last week, JPMorgan and four other major backs were hit with $5 billion in combined penalties and agreed to plead guilty to criminal charges involving an investigation into forex rigging. While this will have a short-term negative impact on the banks’ reputations, the settling of the issue should be a long-term positive.
Capital IQ estimates JPMorgan’s operating earnings will jump 11.5% to $5.90 per share in 2015 and increase another 9.5% to $6.46 in 2015.
Technically JPM stock is trading in a well-defined bull market. After a consolidation from about $54 to $61 that lasted for almost all of last year, shares finally broke from a right triangle (wedge) in April and quickly jumped to a new all-time high at over $67 last week.
The breakout was accompanied by a breakaway gap and preceded by a “golden cross” (long-term buy signal). But rather than chase JPM stock at the current price, I would buy it on a pullback below $63 with a trading objective of $72 for a return of 14%.
Long-term investors should consider this as a cornerstone holding in the global banking group. In addition to substantial appreciation potential, JPM stock offers a 2.7% dividend yield.