About one month ago, we noted how investors were favoring high P/E stocks. Over the past month, focus has shifted to changes in earnings and sales estimates. Over the past month, the three factors (out of 30) that have had the highest correlation to the returns of GKCI DM Index are 1-month change in EPS estimates, 3-month change in EPS estimates, and 1-month change in sales estimates. The factor that has had the fourth highest correlation to returns is also related to earnings as well. Stocks that have had higher EPS growth rates have been performing better over the past month.
Going back to our top 3 factors over the past month, the decile of stocks with the highest 1-month change in EPS estimates are up 2.8% while the decile of stocks with the lowest 1-month change in EPS estimates are down 5.7%. Similarly, the decile of stocks with the highest 3-month change in EPS estimates are up 1.6% while the decile of stocks with the lowest 3-month change in EPS estimates are down 3.6%. In the tables below we show each returns for each of the four factors, broken out into deciles, and in the larger table we show the correlation between the market and all 30 factors.
1-Month Change in EPS Estimate
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
3-Month Change in EPS Estimate
1-Month Change in Sales Estimate
All 30 Factors