The infamous London Whale trade, which saw the bank lose more than $6 billion due to complicated maneuvers, is one of many recent examples. That the bank was also tied to Bernie Madoff was another embarrassment -- one that forced it to pay $1.7 billion to settle accusations that it facilitated Madoff's Ponzi scheme by ignoring the warning signs.
And with recent concerns about CEO Jamie Dimon, who disclosed he has "curable throat cancer," investors are taking a wait-and-see attitude with both Dimon's and the bank's near-term recovery plans. But all of this combined makes JPMorgan one of the best investments on the market today.
From Friday's close of $55.80, the stock is trading at just 8.5 times 2015 estimates, almost 6 points lower than the industry average of 13.88. This is also 11 points below the S&P 500's peer category P/E of 19. This tells me that JPMorgan shares, which are being discounted due to its legal and regulatory exposure, should head toward $70 in the next 12 to 18 months.
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Jamie Dimon won't lose track of the bottom line. The bank's balance sheet remains strong, showing no permanent damage. And investors have been too quick to ignore strong fundamental signs, including the fact that JPMorgan passed the Fed's Comprehensive Capital Analysis and Review (CCAR). Citigroup (C), on the other hand, didn't.