JPMorgan Chase (JPM)
Background: JPMorgan is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity. The company was founded in 1823 and trades an average of 25.4 million shares per day with a marketcap of $156.5 billion.
52-Week Range: $27.85 - $46.49Yield: 2.9% Investors receive $1.20 a year in dividends even after traveling through the financial meltdown that took a few of Morgan's peers over the cliff. The dividends are up from the previous three-year average of 51 cents. I have no way to know if we can expect the trend to continue, but I put a lot of weight into the past. The average analyst target price for JPM is $45.24, and I think an ideal entry is $40.25. Shares have to retrace lower by a slight amount after a brisk move higher in the last week to reach the entry price. It's no surprise to me that the shares are reacting favorably to the Fed's announcement of QE3. Banks have a lot to gain from the nearly free and easy profits QE3 delivers. The added benefit of an improvement in the housing market helps banks in a big way also. Banks are not currently favored, so the mean fiscal-year estimate price-to-earnings ratio is 8.8, based on earnings of $4.68 per share this year. By my standards, an earnings ratio for Morgan under 10 is a sweetheart deal. Still, don't chase it, and let the market take a breath. The last reported short interest is small. Short interest is only 1.1%.
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