The shares of JPMorgan Chase & Co. have increased by more than 20.78% this year alone. The shares recently went up by 0.61% or $0.72 and now trades at $117.91. The shares of NovaGold Resources Inc. (NYSE:NG), has jumped by 65.06% year to date as of 09/12/2019. The shares currently trade at $6.52 and have been able to report a change of -8.56% over the past one week.
The stock of JPMorgan Chase & Co. and NovaGold Resources Inc. were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. JPM has an EBITDA margin of 69.12%, this implies that the underlying business of JPM is more profitable. These figures suggest that JPM ventures generate a higher ROI than that of NG.
The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The debt ratio of JPM is 1.22 compared to 0.67 for NG. JPM can be able to settle its long-term debts and thus is a lower financial risk than NG.Valuation
JPM currently trades at a forward P/E of 11.23, a P/B of 1.62, and a P/S of 4.49 while NG trades at a P/B of 14.17, This means that looking at the earnings, book values and sales basis, JPM is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of JPM is currently at a -1.74% to its one-year price target of 120.00. Looking at its rival pricing, NG is at a -10.07% relative to its price target of 7.25.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), JPM is given a 2.40 while 2.00 placed for NG. This means that analysts are more bullish on the outlook for JPM stocks.Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for JPM is 1.85 while that of NG is just 6.46. This means that analysts are more bullish on the forecast for JPM stock.
The stock of JPMorgan Chase & Co. defeats that of NovaGold Resources Inc. when the two are compared, with JPM taking 5 out of the total factors that were been considered. JPM happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, JPM is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for JPM is better on when it is viewed on short interest.