'A once-in-a-generation chance'. Why JPMorgan advises to buy unpopular quality stocks

As artificial intelligence continues to transform one industry after another, JPMorgan Chase, the largest bank in the United States, has recommended that clients looking for a "safe haven" should pay attention to so-called quality stocks. Rockefeller International called the current market situation an investment "once-in-a-generation opportunity".

Quality stocks are commonly referred to as securities of companies with strong and stable cash flow, sustainable earnings, experienced management and competitive advantages. According to JPMorgan, this asset class is now experiencing one of the worst periods in almost two decades: in 2025, such securities have underperformed their peers by almost 5%, Business Insider writes, citing a research note by the bank's global markets investment strategist Mira Pandit.

According to her, such difficult periods in the past have been an indicator of future positive dynamics. According to the strategist's calculations, during significant drawdowns in developed markets over the past 30 years, quality stocks performed better 78% of the time.

"The period from 2003 to 2008 provides an excellent example: higher quality companies lagged the broad developed markets for four consecutive years from 2003 to 2006, in the run-up to the global financial crisis. But as the economic cycle moved into a mature stage and the global economy slipped into recession, high quality fundamentals came back to the forefront, and quality stocks outperformed the market by seven percentage points in both 2007 and 2008," stated the JPMorgan strategist.

The current "indiscriminate sell-off" has created a rare opportunity to enter quality assets, Ben Ritchie, head of developed market equities at Aberdeen, told CNBC on Feb. 16. He cited the securities of two British companies - analytics provider RELX and credit bureau Experian. Despite the collapse of quotations in recent weeks, their competitive advantages and growth potential "remain in full force," the expert believes.

Investors associate "quality" with financial strength, but there are two problems, Barron's warns. First, there is no single definition of quality stocks, and the approaches of exchange-traded funds (ETFs) with the word "quality" in their names vary widely. Second, the most popular of these funds hold expensive securities, the publication notes. According to the definition of stock index provider MSCI, quality stocks are characterized by high return on equity, stable profit growth and low debt burden of their issuers.

Normally, quality stocks trade at a premium, but now they are undervalued, Ruchir Sharma, chairman of Rockefeller International, wrote in a December 2025 column for the Financial Times. Such an investment opportunity comes "once in a generation," he said. Sharma singled out Lockheed Martin, CVS Health, Tesco, AstraZeneca, FirstRand and Lenovo among promising companies with a capitalization of over $10 billion. These assets have not demonstrated such investment attractiveness since the early 2000s: their discount to the market is comparable to the levels of the times before the collapse of the dotcoms, the expert noted.

This article was AI-translated and verified by a human editor