Uncharted Territory For Stock Valuations As P/S Eclipes 2000

Stock Valuations

Another month and another new high in equity valuations, at least relative to sales. Indeed, the median company in our developed world index (which covers the top 85% of companies in each country) just achieved a price to sales ratio that eclipsed the 2000 peak. There are of course fundamental reasons for this ranging from low interest rates to high profit margins, but the fact that valuations today exceed peak bubble valuations of 2000 is a tough nut to swallow for equity investors expecting to achieve an historically average 7% annual rate of return. What’s more, unlike in 2000 when the median valuation was driven higher primarily by tech stocks, leaving plenty of “value” areas to flock to, valuations today are extended across the board, from staples, to industrials to tech to materials. Save energy as the one sector without peak, or near peak valuations. This scenario should put ever more importance on stock picking and risk management going forward.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

See 2017 Hedge Fund Letters.

Stock Valuations

Stock Valuations

Stock Valuations

Stock Valuations

Stock Valuations

Stock Valuations

Stock Valuations

Article by Bryce Coward, CFA - Knowledge Leaders Capital

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)






Be the first to comment on "Uncharted Territory For Stock Valuations As P/S Eclipes 2000"

Leave a comment