JPM: Still A Strong Long-Term Buy

JP Morgan (JPM) sold off over 5% Thursday even as it produced better than expected top-line earnings, due to a poorly received conference call. Although financials have just been plain ugly this year, JPM is "best of breed" in the banking category. As such, I believe the selloff represents a buying opportunity for intrepid long term investors.

"JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. Its Investment Bank segment provides various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services serving corporations, financial institutions, governments, and institutional investors." (business description from Yahoo Finance)

So here are 8 reasons JPM is a great long term buy at $31.50 a share:

1. It is selling at the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
2. JPM was one of the few large banks not downgraded or put on ratings watch yesterday by Fitch.
3. Analysts consistently underestimate JPM's earnings. The company has beat top line earnings estimates for twelve straight quarters. The average beat over consensus has been 10% over the prior four quarters.
4. JPM has an A+ rated balance sheet, yields 3% and is selling at .7 times book value.
5. Insiders purchased over $8m in new shares in July and August at higher prices.
6. JPM's five year projected PEG is .8 which is a 45% discount to its five year historical average.
7. JPM is widely acknowledged to have the best management team of any major bank, achieved a 7.7% Tier 1 capital ratio under Basel III in the earnings reports yesterda! y and ha s a forward PE of under 7.
8. JPM is selling at significantly under analysts' price targets. Credit Suisse has a price target of $58, S&P is at $47 and the median analysts' price target on JP Morgan is $50.

Disclosure: I am long JPM.

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