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Découvrir BMO Marchés des capitaux
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US Strategy Comment: Value can still be viable
Disponible en anglais seulement.
Summary: Investing in Stocks With Lower NTM P/E Ratios Can Be a Useful Strategy
Throughout much of this bull market, broad-based value strategies have clearly struggled on a relative basis with investors continuing to show their preference for growth stocks time and time again. However, this underperformance should not prompt investors to stay away from all value stocks entirely, in our view, as more pointed, valuation-based strategies can still deliver favorable price returns for investors, based on our work. For instance, our analysis shows that an investment strategy which focuses solely on stocks with NTM P/E multiples less than 15x has produced attractive risk-adjusted returns over the longer term, and we believe this type of value-oriented strategy has the ability to outperform in the coming months given the current market conditions and performance trends highlighted in this report.
Main Points:
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Value Has Underperformed Growth Throughout Much of This Bull Market
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Relative price performance for value has been in a longer-term downtrend versus growth for 10+ years
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A Strategy of Investing in Stocks With NTM P/E Multiples Below 15x Has Produced Attractive Risk-Adjusted Returns
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Stocks with NTM P/E multiples less than 15x historically have generated attractive risk-return profiles on both a monthly return and trailing one-year return basis
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Relative Performance for Low P/E Stocks Has Recently Hit Extremely Negative Levels
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Trailing one-year relative performance for low P/E stocks has fallen to below -1std, levels typically associated with a sharp turnaround
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A Value-Focused Strategy Can Outperform in Various Market Environments
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Value stocks can limit losses during periods of market weakness, yet also outperform during periods of market strength
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Above-Average Market Valuation Should Benefit Stocks With Lower Multiples
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When market valuation is above average, stocks with lower NTM P/E multiples historically have outperformed in subsequent months
-
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Investing in Low NTM P/E Stocks Can Be a Diverse Strategy
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A value-oriented investment strategy provides exposure to a variety of sectors
-
Read more
Recherche et stratégie
mai 14, 2019
Brian Belski, stratège en chef des investissements et chef du groupe Stratégie de placement, offre des conseils en matière de gestion de portef…
VOIR LE PROFIL
Recherche et stratégie
mai 14, 2019
Disponible en anglais seulement.
Summary: Investing in Stocks With Lower NTM P/E Ratios Can Be a Useful Strategy
Throughout much of this bull market, broad-based value strategies have clearly struggled on a relative basis with investors continuing to show their preference for growth stocks time and time again. However, this underperformance should not prompt investors to stay away from all value stocks entirely, in our view, as more pointed, valuation-based strategies can still deliver favorable price returns for investors, based on our work. For instance, our analysis shows that an investment strategy which focuses solely on stocks with NTM P/E multiples less than 15x has produced attractive risk-adjusted returns over the longer term, and we believe this type of value-oriented strategy has the ability to outperform in the coming months given the current market conditions and performance trends highlighted in this report.
Main Points:
-
Value Has Underperformed Growth Throughout Much of This Bull Market
-
Relative price performance for value has been in a longer-term downtrend versus growth for 10+ years
-
-
A Strategy of Investing in Stocks With NTM P/E Multiples Below 15x Has Produced Attractive Risk-Adjusted Returns
-
Stocks with NTM P/E multiples less than 15x historically have generated attractive risk-return profiles on both a monthly return and trailing one-year return basis
-
-
Relative Performance for Low P/E Stocks Has Recently Hit Extremely Negative Levels
-
Trailing one-year relative performance for low P/E stocks has fallen to below -1std, levels typically associated with a sharp turnaround
-
-
A Value-Focused Strategy Can Outperform in Various Market Environments
-
Value stocks can limit losses during periods of market weakness, yet also outperform during periods of market strength
-
-
Above-Average Market Valuation Should Benefit Stocks With Lower Multiples
-
When market valuation is above average, stocks with lower NTM P/E multiples historically have outperformed in subsequent months
-
-
Investing in Low NTM P/E Stocks Can Be a Diverse Strategy
-
A value-oriented investment strategy provides exposure to a variety of sectors
-
Read more
Brian Belski, stratège en chef des investissements et chef du groupe Stratégie de placement, offre des conseils en matière de gestion de portef…
VOIR LE PROFIL
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