Is there any Value Left in US Equities?

The high-flying US equity market has resulted in our US-based stock analysts currently viewing US equity as overvalued. So where do the opportunities lie?

Oliver Kettlewell 8 October, 2014 | 1:22PM
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US equity has outperformed its main regional rivals—the UK, Europe and Japan—since the financial crisis. The high-flying market has resulted in our US-based stock analysts currently viewing US equity as overvalued and we therefore see most value in defensive-orientated opportunities.

For example, large caps appear better value than small caps given that a number of less-mature companies are exhibiting elevated profit margins, more exposed to earnings downgrades than sturdy US blue-chips.

In terms of sectors, energy and materials are the cheapest industry groupings and both are trading around 0.95 times our fair value estimate. Stock-wise, rich valuations mean few stocks hold four- or five-star ratings, though online retailer eBay and Warren Buffet’s Berkshire Hathaway are two household names bucking this trend.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Franklin US Opportunities A Acc  

About Author

Oliver Kettlewell

Oliver Kettlewell  is a fund analyst with Morningstar OBSR.