With the recent pop in growth stocks (following the “dovish pivot” interpretation of the Fed by the market, an interpretation that we think is false) many once again carry implied earnings trajectories that they haven’t a hope of realising, collectively.
Maybe 5 out of 40 below will.
We own 2 of these, CSL, to get some exposure to the Quality factor loading, that is otherwise quite hard to come by, and TPG, which trades at 33x time earnings, but is only ~0.9x book, or 7x EV/EBIT.
So not all the multiples look quite so aggressive, and we feel fairly comfortable with a telecom trading at 25x PE, as TLS does, so, on net, we don’t think it is much of a worry, provided that it doesn’t indeed grow earnings, which we think it will.
As for the other names, well, we continue to avoid them. FPH was very tempting, after the recent enormous downgrade, but the market didn’t react much, so we continue to not buy it.
How sizeable would falls need to be? Well, think a halving for WTC. $130 for COH.
That sort of thing.
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