Use Weak Markets to Buy High-Quality Names

The market remains well off its summer highs, and may be in for a few more rough days of trading before moving into an end-year holiday rally. That means investors have a chance to buy companies well off their highs.

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  • With so many economic uncertainties, buying great companies that lead their industry look like the best bet here. They won’t pop as much in a rally as lesser-known names, but they’ll also tend to hold their value and compound safely over time.

    One industry leader is J.P. Morgan Chase (JPM) among the major Wall Street banks.

    Despite concerns about the company’s assumption of assets from First Republic Bank earlier in the year, the company made a big beat in its latest earnings report.

    Shares have beat the S&P 500 by 10 points in the past year, even amid fears of a banking crisis. With JPMorgan going for 10 times earnings, it’s clear the market is still skeptical.

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  • Action to take: Investors may like shares here, or on any drop lower. At current prices, the dividend yield comes out to 2.9 percent.

    For traders, shares should move higher with the market in the coming weeks going into the end of the year. The January 2024 $160 calls, last going for about $2.65, could see mid-double-digit gains in the months ahead.

    Traders may want to scale into the position, using down days in the market to add to the position.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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