This stock trades at a very low 10.8 times estimated 2016 forward earnings and recently reported very solid second-quarter results. JPMorgan Chase & Co. (NYSE: JPM) is expected to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings and a very solid price-to-book value. Some on Wall Street have cautioned that last year’s divestiture of the physical commodities business could provide an earnings headwind throughout this year.
Improvement in loan growth, slow but improving equity capital markets, and a steady increase in deposits will be a solid plus. Trading at a discount to many of the large cap banks on 2016 earnings estimates helps upside potential as well. With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors.
Dimon put his money where his mouth was earlier this year and reportedly bought a stunning 500,000 shares of the stock for a massive $26 million. That brought his total holdings in the bank to 6.7 million shares, worth over $360 million.
JPMorgan investors are paid a solid 3.0% dividend. The $70 Merrill Lynch price target is about the same as the consensus target of $70.21. The stock closed Friday at $64.18 a share.
This large cap leader makes sense in all markets and is added to the Top Picks list. Dow Chemical Co. (NYSE: DOW) is a market-driven integrated, with an industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses. It delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high-growth sectors such as packaging, electronics, water, coatings and agriculture.
With an improving economy domestically, and emerging markets bottoming, the growth potential for a company like Dow Chemical with multiple revenues and product silos is outstanding. Last year, Dow had annual sales of more than $58 billion and employed approximately 53,000 people worldwide.
Last December the company announced a huge merger with DuPont. It is planning to combine into a company valued at about $120 billion, which will then split off into three separate companies, one focused on materials, one on agriculture and one on nutrition and electronics specialty products. Many on Wall Street think that the merger offers a very solid investment for the future, and the sum-of-the-parts total may be far greater than the current value of the stock.
Dow Chemical investors receive an outstanding 3.53% dividend. The $62 Merrill Lynch price target compares with the consensus target of $59.31 and the most recently closing price of $52.06.
These are four quality companies in sectors that have struggled. Not only will their improved earnings help the overall S&P earnings outlook, they could very well boost all the stocks to new highs.