Hi Mike. I own JPM as a value investment - dividend play.
I am looking to hold for a target price of 180 - assuming no change in yield of S&P 500 (Currently 1.6%).
JPM is one of the Dow Dogs - still. It's a premier name in international business.
Main item with this particular bank stock is that more than 50% of rev. (I believe) are got from trading and investment - and these sources fluctuate more than rev's from a typical bank. (volatile earnings in other words)
The general issue with bank stocks boils down to 2 viewpoints: One view is that sure, banks stocks have risen, but they've always had relatively low multiples, maybe because they've always found a way to overlend and mess up their earnings. You can expect that we are at the top - now that good times are back look to banks to mess up again (buying brokerages??). It - the run up in bank p/e's - has gone about as far as it's gone in past and as far as can be expected. Revenues will probably flatten. Now would be a time to diminish positions in bank stocks.
Other view is, banks have learned from the '80's - they're all more bottom line oriented and also more shareholder focused - as evidenced by bank stock buybacks, increased dividends, mergers (in like businesses.) We're in a financial environment - as long as interest rates remain low, bank earnings (or the perception of bank earnings) will be favorable. People will continue to come around to banks as bank earnings and dividends, and pe multiples grow. Some of these banks are growing better than tech stocks - Citibank vs. Intel. Stay the course (buy more?) - you've got growth, earnings, dividends, low p/e's, aggressive managements.
I believe more of the former case than the latter, although I own several bank stocks. Just one more paradox I live with. Paul. |
