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2-Star Stocks Poised to Plunge: JPMorgan Chase?

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:57PM

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Market-lagging returns could be written in this 2-star.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, banking giant JPMorgan Chase (NYSE:JPM) has received a distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly-rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at JPMorgan's business and see what CAPS investors are saying about the stock right now.

JPMorgan facts

Headquarters (Founded)

New York, New York (1823)

Market Cap

$113.17 billion

Industry

Diversified Financial Services

TTM Revenue

$51.2 billion

Management

CEO James Dimon (since 2005)

CFO Michael Cavanagh (since 2004)

Annual Net Income Growth (Average Past Five Years and TTM)

12.0% and (53.5%)

Competitors

Citigroup (NYSE:C)

Wells Fargo (NYSE:WFC)

CAPS members bearish on JPM also bearish on

Bank of America (NYSE:BAC)

General Electric (NYSE:GE)

CAPS members bullish on JPM also bullish on

Merrill Lynch (NYSE:MER)

Goldman Sachs (NYSE:GS)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 464 of the 2,974 members who have rated JPMorgan -- some 16% -- believe the stock will underperform the S&P 500 going forward, while 25% of the 745 All-Stars have rated it thumbs down. These bears include ponyfan81 and CAPS All-Star gilletbd77.

Two weeks ago, ponyfan81 touched on the next shoe to drop: "More pain coming - consumer credit is the next big hit, and [JPMorgan] has a huge stake there. Bear Stearns acquisition will not be a positive in the end."

In an earlier pitch from last month, gillettbd77 shares that bearish attitude, writing:

Have you looked at this company's Free Cash Flow for the past several years? They're bleeding billions of dollars, and the trend line in that regard is still downward. With commercial real estate on the cusp of destruction, and the continued demolition of residential real estate, the banking industry as a whole is not a good place to be long-term. JP Morgan isn't well-positioned. Too much liability. I will really be surprised if they exist in their current form two years from now.

What do you think about JPMorgan, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool’s own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. JPMorgan and Bank of America are Motley Fool Income Investor picks. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$122.13 (1.66%) $1.99
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$54.38 (0.70%) $0.38
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$36.30 (1.09%) $0.39
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$353.82 (0.61%) $2.14
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$45.94 (1.52%) $0.69
General Electric Company Stock Quote
General Electric Company
GE
$79.93 (1.30%) $1.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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