Could JPMorgan Chase (NYSE: JPM ) be the next Goldman Sachs (NYSE: GS ) ?
If the bank's most recent earnings report is any sign, the answer could very well be "yes." While the company's traditional banking operations -- that is, lending to businesses and consumers -- continue to suck wind, its investment banking and internal trading segments are printing money.
The real opportunity for investors is if the bank can get its banking operations -- along with the assumed operations of Washington Mutual -- back on track and keep up the eye-popping performance from its trading and investment banking operations. Of course, therein lies the risk. If banking operations continue to blunder along and the trading cowboys can't keep picking up the slack, severe disappointment would follow.
For some perspective on how investors see JPMorgan Chase we can turn to the collective opinion of the Motley Fool CAPS community. The stock has 2,874 outperform calls versus 605 underperforms, giving it a two-star rating (out of a possible five). Apparently, CAPS members see better opportunities.
Despite JPMorgan Chase's low rating, quite a few CAPS members have scored big by betting on the stock. Kuzenheimer is the current JPMorgan Chase score leader, racking up more than 170 points with two very timely calls on the stock.
Kuzenheimer is one of CAPS' All-Stars -- players with a rating of 80 or greater -- and has managed an impressive stock-picking accuracy of 68% while racking up nearly 800 points. JPMorgan Chase isn't this player's only great call. Here's a look at a few of the other prescient picks:
|
Company
|
Date Picked
|
Date Ended
|
Call
|
Points
|
CAPS Rating
(out of 5)
|
|
Yamana Gold (NYSE: AUY )
|
8/13/08
|
Still Open
|
Outperform
|
34
|
****
|
|
Joy Global
|
8/17/09
|
Still Open
|
Outperform
|
33
|
*****
|
|
Kimberly-Clark (NYSE: KMB )
|
7/30/08
|
10/31/08
|
Outperform
|
31
|
****
|
Data from CAPS.
So what is this investor looking at more recently?
|
Company
|
Date Picked
|
Call
|
CAPS Rating
(out of 5)
|
|
Sun Hydraulics (Nasdaq: SNHY )
|
9/1/09
|
Outperform
|
*****
|
|
Arch Coal
|
8/24/09
|
Outperform
|
*****
|
|
Nuance Communications (Nasdaq: NUAN )
|
8/20/09
|
Outperform
|
****
|
Data from CAPS.
While not all of these picks may pan out, they could be a good place to start further research. I decided to take a closer look at Motley Fool Hidden Gems pick Sun Hydraulics.
Hydraulic math
The calculus of Sun Hydraulics' business is relatively straightforward. The company sells screw-in hydraulic cartridge valves that help control movement in both mobile and fixed industrial equipment. This means that when industrial markets start getting dragged down by a bedeviling global recession, demand for Sun's valves gets whacked.
The company's recent results prove this. For the second quarter, Sun saw its revenue fall nearly 60% from the prior year, and it reported a $0.5 million net loss.
But the tide could be turning for Sun and its investors. Reports from industrial titans like Caterpillar (NYSE: CAT ) this week are expected to signify signs of life in the sector. Meanwhile, Sun's management team closely tracks the U.S. Purchasing Managers Index and believes that the company's order trends closely follow the movements in that index. Between June and September, that index has jumped from a contractionary reading of 44.8 to an expansionary mark of 52.6.
Hard times or not, CAPS members have stuck by Sun Hydraulics. The stock has nearly 1,400 outperform ratings against a mere 13 underperforms -- giving it a perfect five-star rating.
CAPS All-Star Gedmitri gave Sun's stock a thumbs-up back in August with some very bullish thoughts:
This stock has managed its balance sheet very well during this downturn. Its price is the same as it was in early 2005 with a stronger balance sheet and positioning in the market. They also have not just eliminated positions to maintain margins. Rather, they have kept their knowledge base so when demand picks up, they are not stuck with training a whole new set of employees.
Their products are necessary for the eventual economic turnaround and their rapid delivery gives them a further advantage. With some companies, the attraction to buy comes from a low price, good management, lots of cash, or some other reason. This company has them all and then some.
But here's the important question: What's your take? Will Sun Hydraulics soon find respite from the industrial slowdown? Get in the action by clicking over to CAPS. It's absolutely free and already has more than140,000 stock pickers chipping in to find the best stocks in the world.
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