JPMorgan: the best house in a neighborhood I don't love
JPMorgan earns the highest returns in its group and trades at a premium that reflects it. I like the business and dislike the price. This report sets the levels at which that changes.
Sample research report used to test the layout. Delete before launch.
Thesis
Best-in-class returns, the strongest deposit franchise, and management that has been right about rates more often than the market. None of that is a secret, and the multiple shows it. My interest is in owning it on a pullback, not chasing it at a premium.
Catalysts
- Net interest income guidance, which has been conservative for a year and keeps getting raised.
- Credit costs staying below expectations.
Risks
- A faster-than-expected drop in rates, which compresses the spread every bank earns.
- Consumer credit turning: card losses have been rising slowly for a year.
What would prove me wrong
The premium to the group widening further while I wait. Quality can stay expensive for years.
Position
None yet. Buying a pullback to the 50-day average if the next report keeps the guidance trend intact.