JPMorgan Chase (JPM) shares are flirting with an all-time high, up over 18% year to date, and still remain a bargain, said Diane Jaffee, portfolio manager for the TCW Relative Value Dividend Appreciation Fund (TGDFX) .
"JPMorgan has a deep management bench going way beyond Jamie Dimon, not to mention a fortress balance sheet," said Jaffee. "And their net interest income is going increase regardless of interest rates because of their strong loan growth."
The TCW Relative Value Dividend Appreciation Fund is up 12.5% thus far in 2016, according to Morningstar. The $1.1 billion fund has returned an average of 13.8% annually over the past five years, outpacing 84% of its rivals in Morningstar's large value stock category. The fund sports a trailing 12 month yield of 1.8%, according to Morningstar.
Jaffee says the company is expanding its capabilities with regard to the Internet of Things. On Monday GE's digital unit agreed to purchase privately held cloud-based field service management company ServiceMax for $915 million. The acquisition, slated to close in January, will expand GE Digital's capabilities in analytics and productivity. ServiceMax's connected field software helps companies remotely keep track of equipment maintenance and schedule workforce optimization, among other things, via mobile and cloud computing platforms.
Chevron (CVX) is another one of Jaffee's top picks. The oil major, which yields 4%, is up 21% thus far in 2016 even though oil stubbornly remains below $50 a barrel. Jaffee said Chevron is becoming "cleaner" with its LNG initiatives in Australia and will also start to see cash flow spike in 2017 as its capex declines.
Finally, Jaffee is a fan of Microsoft (MSFT) , which is up 6% so far in 2016 and pays a 2.6% dividend. She expects the company's $26 billion investment in LinkedIn will start to pay off in 2017, calling it the "perfect database" for Microsoft's customers.