JPMorgan Chase stands out among its peers and is today's featured stock from the IBD Stock Screener. The bank stock is in the 5% buy zone of a base after last week's strong earnings report.
The stock has the qualifications for IBD's Relative Strength At New High screen, which looks for stocks that outperform the S&P 500, and spits out a list of top-rated growth stocks reaching a new high on their relative strength lines. The screen scans for stocks with high IBD proprietary Composite Ratings, EPS Ratings and Relative Strength Ratings.
A new high on the RS line is a bullish sign, and if often a precursor to new or additional price highs.
JPMorgan passed the stringent screen criteria and hit a new high on its RS line on the weekly MarketSmith chart, as indicated by the blue dot. Its 87 Relative Strength Rating moved up from 82 four weeks ago.
Bank Stock Earnings Exceed Expectations
JPMorgan specializes in investment banking, financial services for consumers and small business, commercial banking, financial transactions processing and asset management. They manage around $2.6 trillion in assets and operate under the J.P. Morgan and Chase brands.
The firm reported Q4 earnings before the market open on Friday. The company reported $3.57 EPS, surpassing the $3.08 expected. Sales also exceeded FactSet's expectations. Revenue grew 55% from last year's Q4 number, accelerating from a 9% decline in Q2 and an 11% increase in Q3.
Higher interest rates caused mixed outcomes for the firm, as JPM's consumer mortgage originations dropped to about $7 billion from $42 billion a year ago, the lowest volume since around 2004. Higher rates allow banks to charge steeper loan rates, while paying customers less on their balances.
CEO Jamie Dimon is preparing for a recession, and earmarked $1.4 billion in the final quarter of 2022 for potential loan losses.
Quarterly EPS growth was 24% in Q4, up from 11% in Q3, up from a drop in EPS in the prior quarter. Analysts are projecting a nominal 2% annual EPS growth in 2023 and 6% in 2024.
Bank Stock In Buy Zone After Hitting Buy Point
The bank stock gained 2.5% in heavy volume on Friday, but gave back a portion of the gain Tuesday.
Shares are in the buy zone of a flat base after hitting a 138.76 entry on Wednesday. The buy zone extends to 145.70, and formed within a longer saucer base.
The stock is up over 5% in January and about 17% off its 52-week high, but remains above its 21-day exponential moving average.
Industry Leader Gets Noticed, ESG Focused
JPMorgan holds the top spot out of 22 stocks in the Banks-Money Center industry group. The group is ranked 51st out of the 197 IBD industry groups, and moved up from 66th four weeks ago.
Morgan Stanley raised their price target on JPMorgan to 167 from 153 and maintained its overweight rating on the stock. Piper Sandler lifted their target to 157 from 150, also holding an overweight rating.
Mutual funds ownership increased to 4,729 funds holding shares in December, up from 4,644 in September. The bank stock pays shareholders a 2.9% annualized yield.
You can follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
