JPMorgan: 2 Stocks To Buy Now
Hello, savvy investors! Today, I've brought this topic to you to dive into the latest market insights from none other than the financial giant, JPMorgan. Despite a sometimes-wobbly market, their strategists are seeing solid footing and have identified two compelling stocks that they believe are set for significant upside. Ready to uncover these potential gems? Let's get started!
The market can feel like a rollercoaster, but as we kicked off September, the S&P 500 showed remarkable resilience, climbing 10% year-to-date with four consecutive monthly gains, hovering just below record highs. What's fueling this momentum? JPMorgan points to a few key factors:
- Robust Q2 Earnings: Companies are delivering strong financial results, showcasing underlying economic health.
- Federal Reserve Optimism: Hopes for a rate cut later this month are buoying investor confidence.
- AI-Driven Capital Spending: The ongoing surge in Artificial Intelligence investments is driving significant capital expenditures across various sectors.
JPMorgan's wealth management strategists acknowledge the current market "exuberance" but don't see it as irrational. Their forecast is optimistic: they believe the S&P 500 can deliver high single-digit total returns over the next 12 months, even if tariffs remain at current rates. They anticipate financials, utilities, and technology sectors will continue to outperform, primarily driven by improving earnings expectations and, crucially, continued AI investments and capital expenditures.
Given this positive stance, JPMorgan's analysts have been on the hunt for stocks ready to soar. They've highlighted two names that particularly stand out right now. Let's dig into their picks!
First up in the tech sector, we have SailPoint, Inc. (SAIL), a software company specializing in identity security. In today's digital age, where data breaches are a constant threat, securing digital identities is not just important – it's absolutely vital. SailPoint's core mission is to discover and secure machine identities within a customer's network, manage access, protect data, and automate manual security tasks.
Their flagship product, the Atlas platform, is a cloud-based subscription system. This means it requires no local infrastructure for customers, is highly scalable to meet diverse needs, and leverages AI technology for advanced automation and precision. Imagine a vast corporation like General Motors or a retail giant like The Home Depot; SailPoint helps them secure every single digital identity, from employees to automated systems, across their complex networks. They even count the Salvation Army among their clientele – a testament to the broad applicability of their solutions!
SailPoint has an interesting journey, having traded publicly from 2017 to 2022, going private under Thoma Bravo, and then re-emerging with an IPO in February of this year, raising $1.38 billion. While its stock is down 16% since its return to public markets, it still commands a robust market cap of $11.5 billion.
Recent Performance:
- Fiscal 1Q26 Results: Beat forecasts on both top and bottom lines. Revenue hit $230.5 million (up 23% year-over-year) and non-GAAP EPS was $0.01 (beating estimates by $0.02).
- Strong Cash Position: Ended the quarter with $234.3 million in cash, up 52% year-over-year.
- Recurring Revenue Growth: Total ARR (Annual Recurring Revenue) expanded by an impressive 30% year-over-year to $925 million, with SaaS ARR growing 39% to $574 million. The number of customers with over $1 million in ARR surged by 62% from the prior year.
JPMorgan's Brian Essex is particularly bullish on SAIL, noting that the recent share price decline presents a prime buying opportunity. He sees SailPoint as a "best-of-breed leader" poised to benefit from share consolidation in the identity landscape, boasting a strong technical moat and solid execution. Essex gives SAIL an Overweight (Buy) rating with a $26 price target, implying a potential 26% upside. Wall Street largely agrees, with a Moderate Buy consensus and an average target of $25.91.
Next, we pivot from cybersecurity to the world of high fashion with Capri Holdings (CPRI). This luxury retail powerhouse is known for its iconic brands: Michael Kors, Jimmy Choo, and Versace. Founded by the legendary Michael Kors in 1981, Capri has strategically grown its portfolio, acquiring Jimmy Choo in 2017 and Versace in 2018.
Here's an important development: Capri is in the process of divesting Versace. In April, the company entered an agreement with Prada to sell the Versace brand for $1.375 billion in cash, a transaction expected to close in the second half of this year. This strategic move will allow Capri to sharpen its focus and resources on its core luxury brands, Michael Kors and Jimmy Choo. Think high-end handbags, chic shoes, and ready-to-wear fashion – that's the core of what Capri will be focusing on, especially with the powerhouse Michael Kors brand.
Michael Kors remains the cornerstone of Capri's operations, accounting for 695 out of 912 total retail stores (76%) and generating a staggering 79% of the company's sales revenue.
Recent Performance:
- Fiscal 1Q26 Results: While total revenue was down 6% year-over-year at $797 million, it still beat analyst estimates by $23.9 million. Non-GAAP EPS came in at $0.50, significantly beating the forecast by $0.38.
JPMorgan's Matthew Boss is particularly impressed by Capri's business streamlining and its efforts to reinvigorate the Michael Kors brand. He sees significant growth potential, stating, "We see CPRI on a path of multi-year sequential revenue, gross, and operating margin improvement, led by a brand reinvigoration strategy at the Michael Kors brand." This strategy focuses on product improvement, a sharpened value proposition, enhanced marketing, and distribution optimization, all expected to drive improved revenues and bottom-line growth.
Boss assigns CPRI an Overweight (Buy) rating with a $30 price target, suggesting an impressive 46% upside over the next year. While the broader analyst consensus is a "Hold," with an average target of $24.13, Boss's detailed analysis highlights the transformational potential he sees in the company's refined strategy.
Q1. What are the key drivers behind JPMorgan's optimistic forecast for the S&P 500 over the next year?
A. JPMorgan attributes its optimism to robust Q2 earnings, the expectation of a Federal Reserve rate cut, and sustained momentum from AI-driven capital spending. They believe these factors will lead to high single-digit total returns for the index.
Q2. How does SailPoint's Atlas platform leverage AI, and what are its main advantages for customers?
A. SailPoint's Atlas platform uses AI technology to power its cloud-based identity security system, enabling high levels of automation and precision in security. Its main advantages include not requiring local infrastructure, being scalable to individual customer needs, and offering a unified solution for securing access and data.
JPMorgan's latest insights offer a compelling view of market opportunities, even amidst underlying volatility. Their confidence in the S&P 500's potential for high single-digit returns, driven by strong fundamentals and AI innovation, sets a positive tone.
Both SailPoint (SAIL) and Capri Holdings (CPRI) present intriguing investment cases, albeit in vastly different sectors. SailPoint stands out as a "best-of-breed" leader in the critical identity security space, offering robust growth in recurring revenue and a strong technical moat. Capri Holdings, on the other hand, is undertaking a strategic transformation, streamlining its luxury portfolio to focus on the powerful Michael Kors and Jimmy Choo brands, with JPMorgan seeing significant upside in its brand reinvigoration strategy.
As always, while expert analysis provides valuable guidance, it's crucial to conduct your own thorough research and consider your personal investment goals before making any decisions. Happy investing!