Does The Best Financial Company Have Another Leg Up? – JPMorgan Chase & Co. (JPM), Goldman Sachs Group, Inc. (GS), Wells Fargo & Co (WFC)

In the world of big investment banks, I’m yet to hear a good case as to why JPMorgan Chase & Co. (NYSE:JPM) is not the best in breed.  With a great balance sheet, good international exposure, and steadily increasing assets (see below), there are few reasons not to like JPMorgan Chase & Co. (NYSE:JPM).  However, with the stock up over 58% since this past May, is there still room to run, or should prospective investors wait for a pullback before jumping in?

JPMorgan Chase & Co. (NYSE:JPM) is one of the world’s largest investment banks, and one of the most respected.  They offer clients such services as consumer and business banking, mortgage services, credit card services, investment banking, and investment management to individuals, corporations, municipalities, and other financial institutions.

JPMorgan Chase & Co. (NYSE:JPM) is one of the few financial companies to (in my opinion) come out of the financial crisis better off than they went in.  They made two very high-profile acquisitions that added tremendously to both their market share and scope of services.

First, they acquired Bear Stearns in March 2008 (completed in May) in the first major collapse of the crisis.  They acquired Bear Stearns for just pennies on the dollar, paying $10 per share for a company that had traded as high as $172 a year earlier.  The deal greatly strengthened JPMorgan Chase & Co. (NYSE:JPM)’s commodities and asset management businesses, as well as allowed them to enter the hedge-fund servicing prime brokerage business.

Next, in the largest bank failure in U.S. history, federal regulators seized Washington Mutual and almost immediately made a deal to sell all of its assets (but only certain liabilities) to JPMorgan Chase & Co. (NYSE:JPM) for $1.9 billion.  At the time WaMu’s loan portfolio had about $307 billion in assets, of which about $31 billion was considered “bad loans.”  This deal greatly expanded JPMorganChase’s footprint into the west and south, particularly California and Florida, which is where a large portion of WaMu’s 2,200 branch offices were located.

These two acquisitions greatly increased JPMorgan’s market share, and for a while made them the largest U.S. bank by deposits.

Recently, aside from a disastrous trade involving a hedging strategy in its Corporate/Private Equity segment produced a staggering loss totaling $6.2 billion; things have been going well for the company.  With this mess behind them as of October 2012, the stock has rallied nicely, and currently sits around the $49 level, just 8% below its all-time high before the crisis hit.