Tags: jpmorgan | buy | call

JPMorgan Exec: Great Time to Buy Stocks

Friday, 25 Jul 2008 02:49 PM

Now is a great time to buy U.S. stocks, specifically large-cap firms with "global footprints and fortress balance sheets," says Hans Olsen, CEO of JPMorgan Private Client Services, which has $120 billion to invest.

Such large balance sheets allows those companies to essentially self-fund, so they are more immune to credit difficulties. They also can take advantage of strong growth overseas, Olsen told Bloomberg News.

Investors could be soon choosing in a two-tiered market of large global companies and the smaller, mediocre remainder, he predicted.

Olsen's fund has moved money from foreign markets, reinvesting in those large caps, he said. "They're selling at very reasonable multiples — in many cases below 15, some in single digits."

The S&P 500 Index ended the second quarter with a P/E ratio of 17.64 based on 2008 earnings estimates, according to Standard and Poor's.

The ratio for 2008 is higher than its historical average of 15.78 but below the five-year, 10-year and 20-year historical averages, which range between 20.05 and 25.98.

Based on operating earnings estimates for 2008, and not counting special, one-time items, the P/E ratio for 2009 will be between 11.4 and 14.54.

Companies in the S&P 500 forecast second-quarter earnings to drop 12 percent from the previous year, according to Thompson Reuters. Excluding financials, earnings were expected to increase 9 percent.

Plus, 80 percent of sectors show positive earnings growth, Olsen said.

"There is some bear there underneath. Apart from finance, you should see fairly healthy earnings," he said.

As for industries, the fund favors companies involved in natural resources and commodities but which are not price dependent, that is, companies in logistics and materials.

High-yield investments in the fixed income market is another attractive alternative. "With high yield, you're getting compensated," Olsen said.

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Now is a great time to buy U.S. stocks, specifically large-cap firms with "global footprints and fortress balance sheets," says Hans Olsen, CEO of JPMorgan Private Client Services, which has $120 billion to invest.Such large balance sheets allows those companies to...
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2008-49-25
Friday, 25 Jul 2008 02:49 PM
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