Could Buying This Financial Stock Today Set You Up for Life?
Key Points
This leading banking entity’s total return absolutely trounces that of the S&P 500 index over the past five and 10 years.
With a cost advantage and switching costs, this business has established a wide economic moat that supports its competitive position.
Investors can justify paying the premium valuation because of the company’s impressive earnings growth.
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There might be no industry that's more important to our economy than financial services, due to its handle on facilitating capital flows. According to research from The Motley Fool, some of the largest companies by market cap operate in this sector, showcasing the scale they've built. Investors might not want to ignore this.
One of these financial stocks stands out as a strong performer, as its shares have produced a total return of 601% in the past 10 years (as of April 10). If you bought the business today, can it set you up for life?
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Image source: JPMorgan Chase.
Leading the banking industry
The company is JPMorgan Chase (NYSE: JPM), the biggest bank in the U.S., with a whopping $4.4 trillion in total assets (as of Dec. 31, 2025). It has its hands in various areas of the industry. JPMorgan Chase is a leading force in consumer and commercial banking, asset management, and capital markets activities. It has three official operating segments, so the business benefits from demand diversification that smaller banks might not have. This allows it to better navigate different macroeconomic backdrops.
There's no doubt that JPMorgan Chase is a high-quality company. Its wide economic moat is a clear reason why. The massive financial institution, which reported $182 billion in total sales last year, has a cost advantage that allows it to attract cheap deposits and benefit from operating leverage. It posted a fantastic net profit margin of 31% in 2025.
Additionally, JPMorgan Chase, like other banks, has customers that deal with high switching costs. Once a relationship is established, especially for multiple products and services, it becomes more of a challenge to leave.
Taking a closer look at the valuation
JPMorgan Chase might be an outstanding business. However, it's not going to set investors up for life. It's unreasonable to expect a 50-fold or 100-fold gain over the next 25 years from owning this stock. The company is mature, so it's not going to put up that kind of growth.
But should you still buy JPMorgan Chase today with a five-year time horizon? This requires investors to first look at the valuation. The stock trades 7% below its peak, which can present a more inviting entry point. Shares can be purchased at a price-to-book ratio of 2.4. This is much more expensive than its big four peers Bank of America, Wells Fargo, and Citigroup.
But consider that JPMorgan has a much higher return on equity and return on assetsthan these rivals. And in the past five years, its diluted earnings per share have climbed at a 17.7% annualized clip. Investors can easily justify paying a higher valuation for an elite banking entity.
Should you buy stock in JPMorgan Chase right now?
Before you buy stock in JPMorgan Chase, consider this:
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Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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