Diloch Cressatabon
Value stocks continue to underperform as appetite for growth remains high.
But BMO strategist Brian Belski said, “This underperformance should not prompt investors to stay away from all value stocks entirely… as it is clearer that valuation-based strategies can still deliver for investors.” come with favorable price returns” wrote in the note.
Analysis shows that an investment strategy focusing only on stocks with NTM P/E ratios below 15 times has generated attractive risk-adjusted returns over the long term, and we believe this value-oriented strategy can outperform the market in the coming months. Considering Current market conditions and performance trends,” Belsky said.
He added: “Forward price multiples have been expanding throughout the bull market and are currently at over 20x, a relatively rare phenomenon since 1990.”
“We believe this is exactly the environment that is conducive to value-focused investment strategies, as when most stocks are expensive, investors should seek lower-cost alternatives.”
“While the financials sector now accounts for more than a quarter of this value strategy, most other sectors are still relatively well represented, with at least 10 stocks from seven other sectors currently on the list,” Belsky said. “Furthermore, despite the widespread belief that low P/E investment strategies only provide exposure to hard-hit companies and groups, technology stocks – the best-performing sector so far in 2023 – are among the sectors with at least 10 stocks . Current list.
S&P 500 Index (New York Stock Exchange: Spy) (IVV) (VOO) NTM Stocks with P/E ratios below 15x are rated Outperform by BMO:
- AbbVie (ABBV)
- American International Group (AIG)
- Bunge Global (BG)
- Biogen (BIIB)
- Baker Hughes (BKR)
- CF Industrial(CF)
- ConocoPhillips (COP)
- Corporate Payments (CPAY)
- Chevron (CVX)
- Devon Energy (DVN)
- Electrooculogram Resources (EOG)
- Exelon(EXC)
- Gilead (GILD)
- Mosaic (MOS)
- Marathon Petroleum Corporation (MPC)
- Merck (MRK)
- Morgan Stanley (MS)
- Pfizer (PFE)
- PPG Industries (PPG)
- Phillips 66 (PSX)
- SLB (SLB)
- TRV
- Valero Energy (VLO)
