No investment can be called 100% safe. However, JPMorgan Chase (NYSE:JPM) stock isn’t likely to bankrupt its long-term investors anytime soon. The stock gets a “B” rating as JPMorgan Chase continues to widen its influence through merger and acquisition activity.
Don’t get the wrong message here. The “B” rating means that JPMorgan Chase isn’t infallible, especially if customers are reluctant to deposit funds in 2023. There’s an imperfect but fairly solid argument to be made in favor of investing in JPMorgan Chase.
| JPM | JPMorgan Chase | $142.80 |
A Potential Problem With JPM Stock
At first glance, JPM stock looks almost perfect. JPMorgan Chase’s trailing 12-month (TTM) price-to-earnings (P/E) ratio of 10.45x seems to indicate a decent value. JPMorgan Chase offers an attractive 2.83% forward annual dividend yield.
What could investors possibly object to, then? Well, in case you didn’t get the memo, some bankers have been fearful about their deposits in 2023. The collapse of a handful of regional banks, coupled with talk of bank runs, prompted some folks to withdraw their funds from all U.S. banks.
Plus, interest rates on government bonds are fairly high, so there’s less of an incentive to keep one’s money in a savings or checking account. It shouldn’t be too surprising to learn that Jennifer Piepszak, consumer and community banking unit co-CEO at JPMorgan Chase, expects consumer deposits to be “slightly down from here.”
JPMorgan Chase Grows Bigger and Bigger
Prospective investors should remember the potential deposit slowdown could affect JPMorgan Chase’s top and bottom lines. So, there’s no need to over-leverage yourself on JPM stock.
A small investment in JPMorgan Chase should probably be fine if you hold on long enough. After all, JPMorgan Chase is a giant financial institution that just keeps on getting bigger.
JPMorgan Chase has a lengthy history of acquiring the assets of other financial-sector businesses, including Bear Stearns and Washington Mutual. More recently, JPMorgan Chase acquired Aumni and – as you’ve probably heard about – First Republic Bank.
These acquisitions are, according to Bloomberg Intelligence regional banks equity analyst Herman Chan, part of an enduring trend.
“Going forward, once this current banking turmoil subsides, we could potentially see a new era of M&A usher in,” Chan posited.
That’s not an unlikely scenario, so don’t be too surprised if JPMorgan Chase’s assets and influence continue to expand. It’s a trend that some people might not like to see, but it will most likely benefit JPMorgan Chase.
JPM Stock May Be Worth a Small Investment
While safety cannot be guaranteed, JPMorgan Chase’s shareholders have the reassurance that they’re invested in a gigantic company. Moreover, due to consolidation in the financial sector, JPMorgan Chase might only get bigger in the future.
Just be aware that a possible reduction in deposit activity could crimp JPMorgan Chase’s revenue and profits. That said, JPM stock earns a “B” rating and may be appropriate for a moderately sized portfolio allocation.
On the date of publication, Louis Navellier had a long position in JPM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
