Key Points
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Berkshire Hathaway’s cash stockpile has surged to $397 billion.
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JPMorgan Chase continues to post stellar growth and has significant cash reserves, positioning it well for potential market downturns.
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BlackRock boasts nearly $14 trillion in assets under management and is well positioned to grow alongside growing financial markets.
Markets have been volatile each of the past two years, with investors experiencing at least a 10% correction followed by a strong rebound. Volatility remains a threat to markets as geopolitical tensions heat up, government deficits balloon, and consumers continue to bear the burden of higher prices.
This backdrop, coupled with an elevated cyclically adjusted price-to-earnings (CAPE) ratio, could set us up for another correction. If the market were to dive from here, it would be a good idea to have a list of stocks that you would like to buy.
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If this were to happen, here are three no-brainer financial stocks I would scoop up in a heartbeat.
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Berkshire Hathaway continues sitting on a massive cash stockpile
Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) is a massive conglomerate under new leadership with CEO Greg Abel. Abel has huge shoes to fill, and many investors are wondering: Can he build on Warren Buffett’s long-term success?
Buffett, along with longtime business partner Charlie Munger, built Berkshire into a massive conglomerate with businesses across a variety of industries. This makes Berkshire Hathaway a cash-generating machine, and its cash stockpile keeps growing.
In the last year, Berkshire has earned nearly $24 billion in free cash flow. At the same time, it has been paring down its investment portfolio, and its cash stockpile has surged to $397 billion at the end of the first quarter.
Some have criticized the company for missing out on the massive bull run in stocks. But Berkshire is laser-focused on value, which is why the stock has delivered solid returns with lower volatility than the market in the long run.
Berkshire is trading at 14.4 times earnings, and investors have modest near-term growth expectations. That said, in a market correction, Berkshire Hathaway is one stock I’d want to own, because it will finally have an opportunity to put its huge cash stockpile to work.
JPMorgan Chase is an undisputed leader in the banking industry
JPMorgan Chase (NYSE: JPM) is the largest bank in the United States, with total assets of over $3.7 trillion. Under the leadership of CEO Jamie Dimon, the bank has grown to a massive scale, dwarfing its banking peers in the process. Its total assets are larger than those of both Wells Fargo and Citigroup combined, a testament to the bank’s ability to grow while keeping risk in check.
In the first quarter, JPMorgan Chase delivered another stellar performance with strong financial results, including $16.5 billion in net income and a 23% return on tangible common equity (ROTCE). The bank experienced strong performance in its markets segment while its investment banking fees grew 28%. The bank also has a $1.5 trillion war chest in cash and marketable securities, giving it flexibility to put capital to work in a potential credit downturn or recession.
Looking ahead, JPMorgan Chase sees opportunities across global finance, including funding global infrastructure such as data centers and utilities. It also sees an opportunity in the increased government spending, particularly for defense, amid a “remilitarization of the world,” according to Jamie Dimon. Dimon also projects more mega-mergers and believes its scale gives it a notable advantage.
If the market does enter a downturn, JPMorgan would be a top bank stock to add on any dips.
BlackRock is a global asset management giant
BlackRock (NYSE: BLK) is a behemoth in the asset management industry. With almost $14 trillion in assets under management (AUM), BlackRock is the largest asset manager in the world. The company combines asset management and technology to provide services across both public and private markets, situating it perfectly for clients seeking comprehensive solutions.
Over the years, BlackRock has benefited from the growing demand for passively managed exchange-traded funds (ETFs). The company offers iShares ETFs, which CEO Larry Fink has described as “unmatched by any other ETF provider.” Through iShares, investors can gain exposure to a range of products, including index ETFs such as the iShares Core S&P 500 ETF, specialized industry-focused ETFs, and investing themes like low volatility, clean energy, or Bitcoin.
In the first quarter, BlackRock recorded $130 billion in inflows, boosting organic base fee growth by 8%. These fees provide BlackRock with a steady stream of revenue, regardless of market conditions. Revenue grew 27% year over year to $6.7 billion, driven by inflows and higher market prices, which boosted total assets under management.
For investors looking to capitalize on growing financial markets, BlackRock is another excellent stock to buy if the market takes a dip from here.
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Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in Berkshire Hathaway, Bitcoin, BlackRock, and JPMorgan Chase. The Motley Fool has positions in and recommends Berkshire Hathaway, Bitcoin, BlackRock, and JPMorgan Chase. The Motley Fool has a disclosure policy.