Jim Cramer Calls JPMorgan the “Big Dog in the Banking Sector”

JPMorgan Chase & Co. (NYSE:JPM) is one of the 22 stocks Jim Cramer recently talked about. Cramer’s opinion was that the stock is cheap compared to the rest of the S&P 500. He said:

“The big dog in the banking sector, JPMorgan, announced a 7.1% dividend boost that gives the stock a 2.05% yield here. That is the lowest of the group. But JPMorgan also announced a massive $50 billion buyback, and that would shrink the share count by about 6% at these levels… JPMorgan trades at 2.91 times book value… Goldman Sachs, JPMorgan, and Morgan Stanley have the most valuable franchises…

JPMorgan’s widely seen as the best-run bank in the world… And look, when you judge the bank stocks on a price-to-earnings basis, you get a similar story… Goldman Sachs, JPMorgan, and Morgan Stanley are once again on the more expensive side, all selling for roughly 16 times earnings. To put that in perspective, though, the overall S&P 500 currently trades at close to 24 times this year’s earnings estimates. So, wow, these are outta whack. I would say they’re cheap…

Now, when you consider the banks’ expected earnings growth, it doesn’t seem to have much of an impact on these valuations… JPMorgan’s one of the most expensive banks, but it’s on track to grow at a mere 2% clip this year. Why? At least right now, investors are less concerned about the year-to-year changes in earnings power. They’re more concerned about the long-term durability of these earnings. Basically, some banks are trusted more than others, and the trusted ones get the higher valuation…

Still, with the banks featuring discount multiples compared to the overall market, you know what, I’m not so sure that the good times… necessarily have to end for this group. I think they can continue moving higher. The bottom line: In this environment, I bet the big banks are some of the best investments this year, yet still very inexpensive, at least on earnings versus the rest of the market, have more room to run, maybe much more.”

A group of business people discussing plans around a boardroom table adorned with a financial services company logo.

JPMorgan (NYSE:JPM) provides a broad range of financial services, including consumer banking, lending, investment banking, securities services, and asset and wealth management for individuals, businesses, and institutions.

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Disclosure: None.