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Bank earnings: JPMorgan stock is best, strategist says

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The big banks wrapped up earnings with mixed results.

Bank of America, Goldman Sachs, and Citigroup posted a sharp drop in profits. JPMorgan and Bank of America also warned of large loan losses and borrower defaults as the coronavirus crisis and economic damage keeps financial companies' futures uncertain.

Mark Tepper, president of Strategic Wealth Partners, says only one name in that group looks like a buy. He spoke Wednesday, a day before Morgan Stanley reported its earningsΒ and revenue that fell short of expectations.Β 

"What we've heard from the banks so far hasn't been very rosy," Tepper said on CNBC's "Trading Nation."

"Generally, you don't want to own banks in a recession, so if you're going to own one, you might as well own the best of breed, which is JPMorgan."

Tepper said the company has the strongest management and a reliable CEO in Jamie Dimon, who was at the helm during the Great Recession.

"The number you want to keep in mind is book value. So, the book value is $76 per share β€” right now it's trading at 1.2 times book. When that price drops below $76, that's when you back up the truck and you buy it. And you're going to be really happy with the long-term returns if you do that, but the key word there is 'long term,'" said Tepper.

A decline to $76 implies 16% downside. It has not traded at that level since November 2016.

Matt Maley, chief market strategist at Miller Tabak, says the charts show stabilization, but he's not ready to jump into the financials.

"Look at the KBE, the best-known bank ETF β€” recently it made a higher low and a higher high, that's very nice. And we also see that in some key stocks like JPMorgan, Bank of America, and really most of the others," Maley said during the same segment.

Maley says if the KBE ETF drops below $25, its March lows, that could be "incredibly negative" for the bank stocks. It ended Wednesday's session at $26.95.

However, he does agree that JPMorgan could be a stock that leads any rebound.

"It's the best-managed company, it's the best-capitalized company out there. If this stock could bounce back and give it another higher high, just above about the $103 level, if it gets above that on a closing basis, it's going to give it a lot of momentum and really help the stock," Maley said.

JPMorgan would need to rally 13% to reach $103.

Disclosure: Strategic Wealth Partners has a position in JPMorgan.



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