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BofA, JPMorgan or Goldman? Strategist's Top Pick

JPMorgan Chase’s earnings result is "better than what we’ve expected but expect headwinds," said Jeffery Harte, managing director in equity research at Sandler O’Neill.

“You’ll see that credit improvements are not really what’s helping JPMorgan post numbers at this point,” Harte told CNBC. “It’s revenue strength and managing expenses.”

JPMorgan said record investment banking fees helped drive a 36 percent rise in quarterly profit, topping Wall Street forecasts, but warned that credit quality in consumer mortgages and credit cards is deteriorating faster than it expected.

Earlier this week, Goldman Sachs reported a 33 percent rise in quarterly earnings as a strong gain in trading was offset by a one-time charge to repay government loans.

“Goldman Sachs is an investment bank—JPMorgan has a very good investment bank in it, but it’s got a very big consumer commercial lending operation,” he said. “JPMorgan is still going to have some credit headwinds to it that Goldman is not going to have.”

Harte recommended that investors consider Bank of America , saying they have “a very good franchise that is not being properly respected by the stock market and it’s pretty cheap.”

In the meantime, he said JPMorgan is “one of the best managed banks, but it carries more of a premium than a BofA.”

Disclosure:

Harte has investment banking clients who own shares of JPMorgan.

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