Ahead of its quarterly earnings report, JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) rallied. The breakout shows little signs of weakening. JPM stock spent much of this month on the rise. WFC stock erased nearly all of its rally after posting quarterly results.
Both stocks still have upside potential.
JPM posted a GAAP EPS of $3.79. Revenue rose by 3.4% from last year to $30.16 billion.
Despite a pandemic and millions of businesses shutting down, growing revenue in the single digits is impressive. If JPM stock dips post-earnings on a "sell-the-news" event, this is still a positive development. The bank may buy back $30 billion worth of shares at a lower cost. That would benefit existing shareholders.
Wells Fargo is a different story than JPM. The weak net interest income forecast and unimpressive cost-cutting plans sent WFC down by 7.8% after its earnings report on Jan. 15.
WFC said it could save over $8 billion in three to four years.
Combined with a stimulus package in the U.S., which would lift the economy, this bank stock may underperform in the short-term but rise steadily in 2021. Investors should consider accumulating shares if it dips sharply. Otherwise, the other bank stocks are more attractive and less volatile.
