- JP Morgan is selling near the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
- JPM has an A+ rated balance sheet, a management team that is widely regarded as the best of any major bank, and it yields 3%.
- Five insiders have purchased shares over the last two months.
- JPM has beat earnings estimates each of the last six quarters with the average beat about 20% over analysts’ consensus. It sells at less than 7 times this year’s anticipated earnings.
- The median analyst price target on JPM is $50 and Credit Suisse’s price target is $58.
- The moribund housing market continues to provide a major headwind.
- The fallout from the European debt crisis
- Regulatory expansion will impact fees, costs and revenues
Kraft Foods Inc., together with its subsidiaries, manufactures and markets packaged food products worldwide. The company offers biscuits, including cookies, crackers, and salted snacks; confectionery products, such as chocolate, gum, and candy; beverages comprising coffee, packaged juice drinks, and powdered beverages; cheese products, including natural, processed, and cream cheeses; grocery items consisting of spoonable and pourable dressings, condiments, and desserts; and convenient meals, which comprise processed meats, packaged dinners, and lunch combinations. (Business Description from Yahoo Finance)
- Kraft yields 3.3% and has raised its dividend a little over 3% a year over the last half decade.
- Kraft provides good operating cash flow and a low beta (.58) that you would expect from a classic defensive stock.
- Kraft has beat or met earnings estimates each of the last six quarters. The average beat has been approximately 7% over analysts’ consensus.
- Two insiders added shares in August
- Credit Suisse’s price target is $41 on KFT and the median analyst price target on Kraft is $40.
- Integration risk with large Cadbury acquisition and the task of splitting the business into two companies
- Slowing worldwide growth
Disclosure: I am long JPM.