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One of the core financial stocks in my portfolio, JPMorgan Chase (NYSE:JPM), reported earnings this morning. It once again easily beat expectations. This bank continues to impress and has been a solid performer for me since I picked it up in the low $30s. I am "long and strong" here as I believe the stock's best days are ahead of it.

Here are several key highlights from the earnings report, as well as other positives for JPM:

  • The bank reported record earnings and posted $1.40 EPS vs. consensus expectations of $1.24.
  • More importantly, revenue rose a solid 6% to $25.1 billion, beating estimates of $24.4 billion.
  • Credit quality continues to improve. The bank put only $1.8 billion to loan loss reserves down 26% year over year.
  • Housing is the biggest source of collateral for bank loans, and as the housing market continues to improve so should bank earnings. We are in the early innings of the housing recovery, and JPM is the second largest residential loan originator among banks in the country.

Here are four additional reasons JPM should be a core part of a value investor's portfolio at $42 a share:

  1. The stock pays a 2.9% dividend, has sextupled its dividend payout since the nadir of 2009, and still has a low payout ratio (28%)
  2. The stock is selling for just over eight times forward earnings, a discount to its five-year average (11.8).
  3. The company has a fortress balance sheet (A-rated), insiders have been net buyers of the stock over the past six months, and consensus earnings estimates for FY 2012 and FY 2013 have ticked up over the last month. Look for the consensus to be raised further in the aftermath of these better-than-expected quarterly results.
  4. JPM still is priced near the bottom of the five-year valuation range based on P/E, P/B, and P/CF.
Source: Remaining 'Long And Strong' On JPMorgan Chase