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5 Bank Stock Picks for Your Portfolio From Deutsche Bank

1. JPMorgan Chase


Shares of JPMorgan Chase closed at $46.37 Thursday, trading for 1.2 times tangible book value, and for 8.1 times the consensus 2014 EPS estimate of $5.74. The consensus 2013 EPS estimate is $5.34.

Based on a quarterly payout of 30 cents, the shares have a dividend yield of 2.59%.

O'Connor on Friday upgraded JPMorgan to a "Buy" rating from a "Hold" rating, while raising his price target for the shares to $53 from $48, saying the shares had "risen 32% since Aug 2 vs. +62% for the other four market sensitive banks on average," and that the shares "now trade at a discount to other US market sensitive banks on 2013E and in line on our 2014E and 2015E."

The analyst expects JPMorgan Chase to announce plans to cut annual costs in a range of $3 billion to $5 billion, at the company's investor conference on Feb. 26, and that half the cost savings "will likely be incremental to what's already been disclosed," and include "declines in the cost to service mortgages not owned by JPM (worth $1.5-2b annually over the next 2-3 years), as well as costs associated with mortgages on balance sheet (another $0.5-0.7b opportunity)."

"Longer term, we expect JPM to be the best-positioned market sensitive bank for a pickup in consumer loan growth (which we expect to occur by the end of this year as private sector deleveraging comes to an end)."

O'Connor estimates that JPMorgan Chase will earn $5.30 a share in 2013, with EPS increasing to $5.83 in 2014.

JPM Chart JPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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