Warren Buffett and JP Morgan love these 2 stocks

When legendary investor Warren Buffett makes a move, Wall Street takes notice. Known as the "Oracle of Omaha" and the mastermind behind Berkshire Hathaway, Buffett has amassed a fortune of more than $100 billion during his career. Buffett's preferred investing style has always been value investing, which involves finding undervalued stocks with strong fundamentals.

So, it's definitely worth checking out Buffett's Berkshire Hathaway portfolio to see what stocks he's bought recently. And when some of those stocks also get the backing of one of Wall Street's top banks, like JP Morgan, it sends an even stronger signal that these names may be ripe for the picking.

With that in mind, we dug into the TipRanks database to get the details on a couple of stocks that have received endorsements from both of these investment institutions. Let's take a closer look.

Capital One Financial ( COF )

First on our list is Capital One Financial, a bank holding company located in Fairfax County, Virginia. Capital One is well known as a credit card issuer - the "What's in your wallet?" company. The slogan is ubiquitous in television advertising. In addition, the company provides retail and commercial banking, savings accounts and auto loans.

Capital One Banking offers retail customers the benefits of fee-free banking and access to more than 70,000 ATMs. These advantages are supported by the bank's assets - as of March 31 of this year, Capital One had total deposits of $349.8 billion, part of total assets of $471.7 billion.

At the end of April, the company reported its results for the 1st quarter of 2023. The top result of $8.9 billion was down 2% from the same period last year and beat the $163.8 million forecast. In the end, the bank's adjusted earnings per share of $2.31 were less than half of last year's figure of $5.62 and were well below the forecast of $3.93.

However, the picture is not so bleak. Capital One announced its regular quarterly dividend in early May and kept the payout at 60 cents per common share. This is the seventh quarter in a row with dividends at this level. The annual rate is $2.40. The US yields 2.6%, which is about 2% above the market average.

Apparently, Buffett believes that the positives far outweigh the negatives. It purchased 9,922,000 shares of COF stock in the first quarter, a stake that is now worth $902.4 million.

Buffett is not the only bull here. Assessing the company's outlook, JPMorgan 5-star analyst Richard Shane thinks it's a stock worth picking up and holding.

“We reiterate OW and view potential near-term weakness as an opportunity for investors with a medium-to-longer outlook… COF has the potential to generate the highest returns in the credit card group as strong fundamentals and adverse sentiment converge. The company has a CET1 ratio above its historical average, significant loss reserves and stable funding, reflecting the company's leading depository franchise (branch and online),” Shane opined.

These comments support Shane's Overweight (i.e. Buy) rating, while his $102 price target implies a potential 12% upside potential for the stock. (To view Shane's track record, click here)

Overall, according to TipRanks, the stock has a consensus rating of Moderate Buy based on 13 recent analyst reviews, which include 7 buys, 4 holds and 2 sells. The average target price of $111.27 is more bullish than JPM's forecast and suggests a 22% upside from the current trading price of $90.95. 

HP, Inc. (HPQ)

Shifting our focus from banking to the technology industry, let's take a closer look at HP. As a prominent name in the field of personal computers, HP has a rich history as a descendant of Hewlett-Packard. In 2015, it spun off from its parent company and now operates independently, focusing on its PC and printer divisions. Today, HP offers a wide range of products including PCs, laptops, printers, ink cartridges, monitors and accessories. They have expanded their offerings to include audio visual devices, gaming peripherals and even high quality printer paper.

The shift to remote work and home office upgrades during the quarantine period has been a net benefit for HP, and the company has seen sales improve during that time. However, in recent quarters, revenues began to decline. The company is seeing a drop in demand for new PCs in part because potential customers (both commercial and retail) have recently upgraded computers during the pandemic, and because customers are beginning to hold back on large purchases in an increasingly uncertain economic environment.

This was particularly evident in the first quarter of FY23, when HP reported total revenue of $13.83 billion, beating analysts' estimates of $345.6 million and down nearly 19% year-over-year. The company's GAAP earnings per share were 75 cents, in line with expectations.

Despite a weak fiscal first quarter, HP's outlook, reflected in its full-year outlook, remains bullish. The company forecasts earnings per share in 2023 in the range of $3.20 to $3.60 per share; this gives a midpoint of $3.40, well above the consensus estimate of $3.29. Additionally, the company expects free cash flow to be between $3 billion and $3.5 billion in 2023. The midpoint of that range, $3.25 million, is $160 million above the $3.09 billion estimate.

HP's view is not the only bright spot. The company has been gradually increasing its dividend since late 2015, and the most recent common stock dividend declaration of 26.25 cents is due on July 5. At an annualized rate of $1.05 per common share, the dividend currently yields 3.63%.

Obviously, Buffett likes the opportunity to invest here. The well-known investor increased its holdings in HPQ by 16,476,783 shares in 1Q23.This represents a 16% increase in its stake, which now consists of more than 120.9 million HPQ shares, which is now valued at nearly $3.59 billion .

As for JPMorgan, the firm took a positive stance on HP, betting on a recovery in consumer power and demand for PCs. Analyst Samik Chatterjee explains JPM's view: “Driven by our global PC model, which includes a 21% volume increase for the PC end market between 1H23 and 2H23, we raise our PS segment forecasts for HPQ due to a favorable position in the consumer segment, which is expected to the main driver of recovery. In addition, given the stabilization of gross margins after the digestion of reserves in the channel, we expect that the growth of operating margins will be related to the use of profits due to the minimum cost structure."

According to Chatterjee, this supports both an Overweight (i.e. Buy) rating and a $35 price target, indicating an 18% upside potential for the stock.

While Buffett and JPMorgan are willing to commit to HPQ, Wall Street generally isn't so sure. The 8 recent analyst reviews for the stock are broken down into 1 Buy, 5 Hold and 2 Sell, for the analyst consensus of Hold. Shares are sold for $29.66. US, and the average target price, which is currently $29.38. US, suggests that stocks will remain in a range for the foreseeable future.