Whereas we don't advocate going long here without a good reason, it makes sense to present some data for those who are brave enough and are looking for good opportunities, as well as identifying undervalued sectors (a common theme seems to be that equities are trading as a whole asset class, with little distinction between different industry groups). With the help of some recent charts from GS (which incidentally is most overwight on Financial, Staples and Telecom, and most underweight on Info Tech, Energy and Healthcare) we present the facts and leave it up to investors to draw their own conclusions.
- Core Growth: i) forward sales ii) near-forward EPS and iii) far-forward EPS
- Momentum: EPS revisions in the last 4 weeks
- Profitability: i) forward operating margin, ii) forward profit margin, iii) forward change in profit margin and iv) ROE
What are screenable Value metrics:
- Sales: forward EV/Sales
- Earnings: i) P/E (next year); and ii) P/E (long-term) i.e. PEG
- Cash flow: i) CF Yielf and ii) EV/EBITDA
- Book Value: P/Book
- Dividends: i) Relative Div. Yield and ii) Relative Implied Growth
Results of a screen thus posited indicate that resulting Growth companies are the ones with >70% of Growth score; Value: >70% of Value score, GARP: >50% of Growth and >50% of Value, and the "discarded" unattractive companies have <40%>
The resulting matrix is presented below, with a 10,000 foot industry break out based on the above categories.
Our caveat: purchase with caution, and not follow every heart beat of the market (which is on bypass anyway), but opportunities do exist.