There’s one stock in the struggling banking sector that one expert says is the “apple” of banking.
BK Asset Management managing director of FX strategy Boris Schlossberg said this week that, “JPMorgan (NYSE: JPM) is a brand that does everything well.”
“I actually love JPMorgan,” Schlossberg said, adding that the bank isn’t “the best in everything, but it does everything incredibly well from the consumer side and the corporate side.”
JPMorgan shares are down more than -28% so far this year as the broader sector has struggled to recover after the coronavirus sell-off earlier this year. However, Schlossberg says it’s about time for the sector to start moving higher.
“The banks are surely due for a bounce,” Schlossberg said. “Simply because they’ve just underperformed the broader market by so much that they are really relatively cheap to the rest of the market. Their underlying business is quite good.”
There’s one thing, though, that Schlossberg says could impact the sector’s performance moving forward.
“It really comes down to rates,” Schlossberg added. “The banks become truly a strong buy if we did an up move in the 10-year [Treasury] closer to 1%, but we don’t even have to do that. As long as rates stay stationary here, and just moderately move up.”
Piper Sandler’s Craig Johnson agrees that rates would need to move higher before investors should go all-in on the sector.
“We need to see interest rates up, and we also need to see the dollar perhaps weaken a little bit for this trade out of growth toward more of these value-type stocks to ultimately play out,” Johnson said.
Johnson added that he agrees JPMorgan may be the best bet in the banking space.
“This is one of the best looking companies inside the sector,” Johnson said. “It’s been sort of consolidating coming off the March lows, kind of grinding higher, but consolidating. A move above $105 would open the door to $110 on this stock, and we think it’s one people should be investing in at this point in time.”