Dick Bove thinks JPMorgan Chase will push one company out of its way in a matter of months. "To become the most profitable company is going to take a few years," says Bove, Vice President of Equity Research at Rafferty Capital. "But I think by next year, it's very possible that JPMorgan Chase could be the third most profitable company in the country, supplanting Chevron."
Last year, JPMorgan Chase's profits were $21.3 billion compared to Chevron's $26.2 billion. At least one thing going for JPMorgan Chase's ranking is actually oil prices, according to Bove. As the price of crude goes down, Chevron's profits go with it. The bank is also pursuing initiatives that Bove believes will lead to increased loan volumes and higher profit margins.
Will JPMorgan Chase's profits catch up to Apple (#2 at $41.7 billion) and ExxonMobil (#1 at $44.9 billion)? "I think that Apple might be the easier of the two," says Bove. "Exxon is at the top and I think it's going to be extraordinarily difficult to supplant Exxon."
Bove thinks one of the things that will eventually lower Apple's profits is its long-term strategy. "They have planned obsolescence into their products," notes Bove. "The American public is not responding favorably to that any longer."
"Apple needs a major new thrust. Otherwise, it becomes a dividend play, a value play, something of that nature. So, there's a possibility [JPMorgan Chase] could top Apple. It's not going to be easy, however."
JPMorgan Chase's profits grew 12% last year. If it continues at that rate every year, it could pass Apple's current profits in under six years.
Bove believes that, given its fundamentals and price-to-book value, JPMorgan Chase is cheap.
"I think there's a tremendous opportunity to get substantial capital gains in this stock from this level."
For more of this interview and Bove's insights into JPMorgan Chase, watch the video above.