We recently published a list of 13 Best Cheap Stocks to Invest in for Beginners. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against other best cheap stocks to invest in for beginners.
Are New Highs Possible for the Stock Market?
The last time the S&P erased a 15% decline in under six weeks was 1982, which tells a lot about the current market dynamics we are currently in. On May 14, Dan Greenhaus, Solus Alternative Asset Management strategist, appeared on CNBC’s ‘Closing Bell’ to talk about the recent market action and what really matters about the recent market rally, amid other things.
Greenhaus was of the view that this trend tells us more about the drop than the rebound because, as many market practitioners know, there is a symmetry here. Often, the speed or rapidity with which you experience declines says something about how fast you can come back.
While there is something to be said about how fast we have come back, the sell-off was 20%, basically top to bottom, on worst-case outcomes that were really unlikely to come to pass and have since proven unlikely to come to pass.
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Investors were really concerned about the likelihood of 150% tariffs on China, $440 billion of imported goods, and so, the market acted according to the headlines in some respects. However, Greenhaus opined that the headlines could have been interpreted more rationally for what they were: “a publicly based negotiating strategy”, which in itself poses a semantic debate.
He said that the biggest issue in the short term, keeping the rapidity of the decline aside, is the importance of how the market is above where it was on Liberation Day and, more importantly, above the 200-day moving average. It would be appropriate, according to him, to put aside the whys and hows, solely focusing on holding that 200-day moving average.
However, this could be more of a debate of fundamentals than semantics, as the fundamentals last week were deemed to be deteriorating at a reasonably quick pace. While the job report was better than expected, recession expectations were looming everywhere, and a tremendously dense fog was looming over corporate America, muddying the situation for what was going to lie ahead. The market now seems to have a wholly different narrative, even when tariffs exist on China.
Talking about these trends, Greenhaus pushed back on the notion that things were deteriorating last week, calling it a sentiment and expectation deterioration only, as people were apprehensive. According to him, companies around the world are thriving, and he supported this statement with the optimistic earnings reports, commentaries, April updates by companies like Mastercard and Visa, and sales by big box retailers. He acknowledged that while investors are still apprehensive about what the future holds, things look “pretty darn good,” at least right now.
Our Methodology
We sifted through stock screeners and financial media reports to compile a list of the best cheap stocks for beginners with forward P/E ratios under 15. We chose the top 13 with the highest number of hedge fund holders as of Q4 2024, sourcing the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment.
Note: The data was recorded on May 14.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Forward P/E: 14.16
Number of Hedge Fund Holders: 123
JPMorgan Chase & Co. (NYSE:JPM) is the second-best cheap stock for beginners to invest in. It is a financial holding company that provides financial and investment banking services. The company focuses on commercial banking, investment banking, financial transaction processing, asset management, and more. Its operations are divided into the following segments: Consumer and Community Banking (CCB), Commercial and Investment Bank (CIB), Asset and Wealth Management (AWM), and Corporate.
On May 8, Morgan Stanley analyst Betsy Graseck maintained their neutral stance on JPMorgan Chase & Co. (NYSE:JPM) and gave it a Hold rating. However, the analyst highlighted the stable outlook for the company amid economic volatility, claiming that she does not expect any changes in its financial guidance for 2025 despite the uncertainty surrounding tariff impacts and the current economic volatility. This includes expenses, net interest income, and card net charge-offs.
The analyst also noted that JPMorgan Chase & Co. (NYSE:JPM) will likely maintain its through-the-cycle return on tangible common equity (ROTCE) target of approximately 17%. However, she anticipates it surpassing this target in the coming years, supported by efficient capital management and a higher interest rate environment. The company also holds potential for accelerated share buybacks driven by excess capital, which could further improve ROTCE.
Overall, JPM ranks 2nd on our list of the best cheap stocks to invest in for beginners. While we acknowledge the potential for JPM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than JPM but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
