Hold JPMorgan Chase Shares as Bank Takes Sustainable Investing Seriously

It’s one of the biggest and most famous American banks. JPMorgan Chase (NYSE:JPM) is a bona fide financial giant, and JPM stock has served investors well through thick and thin.

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The thing is, you probably won’t hear young stock traders buzzing about JPMorgan, or about banking firms in general. This sector doesn’t have the flashy allure of, say, electric vehicles or cryptocurrencies.

However, this doesn’t mean that JPMorgan is so old-school that millennials and zoomers should ignore it. In fact, the company is entering into new-school segments like fintech and ESG (environmental, social and governance) through a series of acquisitions.

At the same time, both value-focused and income-oriented investors can find things to like about JPMorgan today. So, let’s start with some technical analysis and see if there’s a bargain to be found here.

A Closer Look at JPM Stock

First things first: let’s talk about the dividend. In general, banks are known for offering yields that are decent, if not spectacular.

JPMorgan would fall into that category. Currently, the company provides a forward annual dividend yield of 2.31%, which is not too bad at all.

Now, here’s a metric that people should pay more attention to, in my opinion: the beta.

For JPM stock, the five-year monthly beta is 1.19, meaning that the stock moves only slightly faster than the S&P 500. So, you can hold the stock and sleep easily at night because there isn’t too much volatility.

And now for a classic valuation metric. The stock’s trailing 12-month price-to-earnings ratio is 12.38, which is quite reasonable.

In other words, JPM stock appears to be a real bargain at the current share price.

The stock was above $150 in early July, and that might seem expensive. Still, the P/E ratio suggests that it’s trading at a perfectly reasonable price point.

On a Buying Spree

Can an old dog learn new tricks? Young investors might wonder whether an established bank like JPMorgan can keep up with modern trends.

It’s a legitimate concern. For instance, older financial institutions have sometimes been slow to incorporate fintech into their business models.

On the other hand, JPMorgan appears to be engaging in a buying spree, with three fintech acquisitions (or at least, agreements thereto) within the past year.

In December 2020, JPMorgan agreed to buy fintech start-up Boston-based 55ip. Together, they offer “an advisor-facing platform to access a suite of diversified J.P. Morgan Models to meet a variety of client needs.”

When they say, “advisor-facing,” they’re presumably not referring to a human advisor, but an automated one.

And speaking of robo-advisors, in June JPMorgan announced that it would acquire Nutmeg.

A U.K.-based online investment management platform, Nutmeg is a large robo-advisor and the company offers a broad array of investment-account types.

Combining ESG and Wealth Management

So, that’s two fintech-focused acquisitions. What about the third one?

That third buyout will be in the ESG domain. Thus, in late June is was revealed that JPMorgan plans to acquire San Francisco-based fintech start-up OpenInvest.

To sum it up, OpenInvest provides ESG-related tools within the wealth management sector.

Established in 2015, OpenInvest focuses on helping advisors tap into the social and environmental impact of their clients’ investment portfolios.

Joshua Levin, OpenInvest’s co-founder and chief strategy officer, clarified that his company’s partnership with JPMorgan “combines leading ESG technologies with America’s largest bank and the ability to reach nearly half of all American households.”

The deal is expected to close in the third quarter of this year.

The Bottom Line on JPM Stock

Now, you have proof positive that an old dog like JPMorgan can actually learn some new tricks – and venture into modern segments like fintech and ESG investing.

And with that, I’ll assert that younger investors should consider a position in JPM stock.

It’s got something for practically everyone – not only old-school value and dividend hunters, though they should appreciate the stock as well.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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