The world’s economy is recovering and should improve further this year.  Consumer spending increases and the availability of cheap capital will be a bonus for banks.  JP Morgan (JPM) is perfectly positioned to take advantage of this trend.

JP Morgan has master banker Jamie Dimon at the helm as Chairman and CEO.  Dimon has largely escaped the popular backlash against bankers by quickly repaying government TARP loans.  JP Morgan is one of the best capitalized banks and has come through this financial mess with flying colors.  They are one of the good banks that had limited exposure to all those sub-prime loans that went bust.

Recently, Jamie Dimon said this about the economy:

“We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery.”

Dimon’s upbeat comments about the economy are a strong signal that this economic recovery is for real.

JP Morgan Chase is the world’s leading bank.  JP Morgan’s activities are organized into six business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management.  Chase, its retail bank, has over 5,000 branches in 60 countries around the world.  JP Morgan is ranked first worldwide in global investment banking.

I’m bullish on JPM because they are poised to see higher revenues, lower credit costs, and higher capital levels. JP Morgan is growing its workforce by adding more personal bankers, loan officers, investment sales representatives, and small business relationship managers.  This hiring strategy is allowing them to continue to grab market share from their competitors.  They also made some key acquisitions on the cheap during the recent economic crisis.  These acquisitions will lead to higher revenues for JP Morgan.

Last Wednesday, JPMorgan reported earnings of 74 cents per share, up from 40 cents per share a year earlier.  The bank reported a better-than-expected first quarter and the stock soared on the news.  Their revenues were $28.2 billion which also beat views.  Furthermore, the report signaled that losses on mortgages and consumer loans are lessening and JP Morgan’s traditional banking business will benefit.

I expect JPM stock to run much higher and I like it both in the short-term and the long-term.  I still recommend you buy stock in JP Morgan Chase (JPM) because they are on track to maintain healthy banking fundamentals long-term.  Plus, the company should continue to see impressive earnings growth in the near term.  They may even hike their dividend soon which should result in the stock skyrocketing.  I expect a dividend hike to come by September of this year.

As a further confirmation of my bullish position, Reuters rates JP Morgan stock “Outperform”, which is positive.  Plus, both Citigroup and Deutsche Securities give JP Morgan stock a “Buy” rating.

JP Morgan stock looks good from a technical perspective as well.  The stock’s 20-day simple moving average (SMA) is rising which indicates the stock will head higher.  The stock is showing a nice up-trendline on the chart below.  And the stock has broken above overhead resistance which is quite bullish.  Both the up-trendline and resistance line form a triangle formation.  It’s a very positive signal when you see a triangle pattern breakout!

JP Morgan stock (JPM) is currently trading around $47.81 per share.  I originally told IDE readers to get in around the $42 level.  It’s not too late to get into this bank that dominates is space.  I expect it to blast above $60 per share in the next few months.

In fact, I’m so confident that it will go up that I just recommended the readers of my Options Power Trader buy call options on this stock to aim for gains of 100%, 200% or more.  Options let you ratchet up your leverage so you could really cash in on a developing trend.

Of course, there are no guaranties and a loss is possible if JP Morgan’s shares do not go up as forecasted.  But, I would be surprised if you didn’t see nice gains in the short-term and the long-term with this stock.

Bottom Line:  Buy JP Morgan stock (JPM)

Best Wishes,

Ted Peroulakis, MBA
Financial Analyst
Investor’s Daily Edge

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