JPMorgan Chase & Co. (NYSE:JPM)’s credit quality is improving and the bank is downsizing its workforce to achieve higher profitability. The company will be eliminating 19,000 jobs by the end of 2014, which will lead to a $1 billion reduction in overall expenses. Thanks to its steady performance, JPMorgan Chase & Co. (NYSE:JPM) has managed to outpace other big banks, such as Citi and Bank of America Corp (NYSE:BAC).
JPMorgan Chase & Co. (NYSE:JPM) now trades with at 1 times book value, but there could still be room to grow as the bank holds a dominant position in traditional banking and asset management. Another one of JPMorgan’s big shareholders is billionaire Ken Fisher (check out Fisher’s top picks).
Apple Inc. (NASDAQ:AAPL) trades at around 10 times earnings, which is at the low end of its historical five-year historical range of 10 times to 38 times. Apple Inc. (NASDAQ:AAPL) also has an impressive balance sheet, with no debt and some $137 billion in cash, short-term investments and long-term marketable securities.
Apple’s ability to generate cash is unrivaled, with Apple having generated $23.4 billion in cash flow from operations during the first three months of fiscal 2013. The one positive about Apple Inc. (NASDAQ:AAPL)’s 18% fall in stock price year-to-date is that its dividend yield is now upwards of 2.8%.
The real issue with Apple is that growth might be slowing. Revenue is expected to be up 12% in fiscal 2013, compared to the 45% growth in 2012. What’s more is that Apple’s recent March-ended quarterly results showed that EPS was $10.09, compared to $12.30 for the same period last year. Yet, Apple Inc. (NASDAQ:AAPL) still has billionaire David Einhorn as one of its biggest supporters, with a $1 billion position (check out Einhorn’s latest picks).
Bottom line
Legg Mason kept JPMorgan Chase & Co. (NYSE:JPM) and Apple Inc. (NASDAQ:AAPL) as its top stock picks, and while I agree that JPMorgan could still have more upside for investors, the competition that Apple faces may continue to put pressure on growth, so I am on the sidelines for now. I tend to agree with Legg that Aflac will see interim pressures, but I also see more upside for both Target and Capital One.
The article Legg Mason’s Latest Shakeups originally appeared on Fool.com and is written by Marshall Hargrave.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Aflac and Apple. The Motley Fool owns shares of Apple and JPMorgan Chase & Co. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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