The Shift From Growth To Value

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Over the past 12 months, growth stocks have delivered nearly five times the performance of value stocks. During the nine-year bull market growth stocks have outperformed value by about 50% as measured by the Russell Indexes. But the tides may be turning. Read the full note from Fidelity here: https://bit.ly/2vs3S5S According to analysis from Fidelity Investments, valuations on growth stocks are significantly higher than value stocks. The price-to-forward earnings ratio for growth stocks is over 30 while value stocks have a forward P/E under 20.   This seems to be thinking behind the most recent recommendations made by RBC Capital Markets. RBC’s equity strategy team has upgraded utility stocks on attractive valuations while downgrading more growth-oriented tech stocks. "Major style shifts tend to happen late in or at the end of bull markets," Lori Calvasina, RBC's head of US equity strategy, wrote in a client note. "Earnings leadership is shifting from growth to value. Valuations look a bit stretched in growth relative to value again." Two Fidelity portfolio managers have also commented on this shift. Matthew Friedman, portfolio manager of the Fidelity Value Strategies Fund, says “The US equity market looks fairly expensive, but that's because I think growth stocks — one particular part of the market — are skewing the market's price-to-earnings ratios higher.” Friedman is still finding good deals among high-quality value stocks. He remains focused on high-quality compan

Published 2018-04-19 · Watch on YouTube ↗
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