Jim Cramer on JPMorgan: "You Wait for the Reaction to Jamie's Cautious Commentary to Give You a Better Entry Point"

JPMorgan Chase & Co. (NYSE:JPM) is one of the stocks Jim Cramer talked about. While discussing the company, Cramer noted that the banks are “chronically undervalued.” He stated:

“At the same time, the banks are starting to bother me. Now look, don’t get me wrong, you know this group is chronically undervalued. I have praised it many times to you. These are tremendous franchises, but we’re headed into earnings season. Do you know that in six days, JPMorgan reports? I think this, the biggest bank, is cheap. Stock’s way too cheap actually, 16 times earnings. So why not buy it now? I am worried short-term because even though CEO Jamie Dimon’s a fantastic banker, he’s also a really cautious person. He’s not going to get on the conference call and crow that his stock’s undervalued. He’s far more likely to talk about the potential landmines out there.

Jamie is a straight shooter. There’s nothing bad about that. When things look ugly, he tends to tell you what could potentially go right. When things look good, as they do now, he tends to tell you what could go wrong. I love that. But the media will take the comments out of context, and they’re going to present him as an extreme pessimist who’s worried about the next credit crisis. Remember his comments last quarter about the blowup of a subprime lender, Tricolor, and the collapse of First Brands, the giant auto parts conglomerate, both casualties within the same month of September last year. JPMorgan took a $170 million loss on Tricolor. Not his finest moment, although it’s barely more than a rounding error for the company.

Then Jamie, on the call, lowered the boom, telling us, and I’m going to quote, ‘I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.’ He acknowledged that he was tightening his lending policies, and with that admonition, he crushed his own stock. JPMorgan stock dropped from $307 to $294 in a couple of days. Many people who bought it in the 300s then dumped it. They panicked, they bought high, and they sold low, and that’s not what we want here. And it turns out, frankly, there really have only been those two cockroaches, but he is a cautious man. You know what? He’d probably double down on the cockroach commentary. Maybe he’ll have a bomb or two about the future of the Federal Reserve’s independence or the lack thereof. Now, that’s when you want to buy, after he lowers the boom, not up here after a huge run, even if it did get hammered today on a note of caution by an analyst. So what do you do? You wait for the reaction to Jamie’s cautious commentary to give you a better entry point. If it doesn’t happen, pass.”

JPMorgan Chase & Co. (NYSE:JPM) provides financial services, including banking, lending, payments, and investment management. In addition, the company offers investment banking, asset management, and advisory solutions.

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Disclosure: None. This article is originally published at Insider Monkey.