In spite of the fact that the nation's largest bank by assets is being rocked by losses so big that some are calling for Dimon's resignation, the shares of JPM are well off their lows of the day.
Still, this huge error in fiscal responsibility may cause an ongoing correction in the banking and financial service giant's stock (here's the one-year chart for JPM) and a few of their peers.
Paradoxically, this setback for JPM may cause some of it's more financially conservative competitors like US Bancorp (USB) to look more attractive to investors and traders.
USB shares were up almost 1% in mid-session trading Friday even as shares of JPM were down over 7%.Two other financial/bank stocks that may benefit from the JPM mess are Warren Buffett favorite Wells Fargo (WFC) and, on my radar screen, BB&T Corp. (BBT). BBT is a Winston-Salem, N.C.-based financial holding company for Branch Banking and Trust Co. that provides various banking and trust services for retail and commercial clients. If you want to learn more about BBT, I strongly urge you to visit their user-friendly Web site to see why they've been so profitable and have plans to continue to please their satisfied shareholders. BBT pays a 2.6% dividend and is priced at around 11 times forward earnings. USB pays a 2.5% dividend and trades at almost exactly the same forward price-to-earnings ratio as BBT. Both USB and BBT are currently near their 52-week highs, which should encourage investors to buy on pullbacks or any unexpected market weakness between now and the historically weaker stock market months of September to October. Of the three JPM competitors mentioned, WFC pays the highest dividend (2.7%) and has a more modest forward P/E ratio of around 9. Potential investors may want to wait to see if the JPM situation and the economic crisis in Europe may present a better buying opportunity, say close to $30-per-share.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV