In June, Applied Finance published an article that explored the role of intrinsic value in passive indexing where we studied various value-weighted approaches to form position sizes based on market value, book value and intrinsic […more]
The notable tactical valuation themes we observe in the current marketplace indicate that large cap stocks are slightly more attractive than their small cap peers. We also observe that investors can improve a portfolio’s intrinsic value characteristics by allocating towards highly profitable, growing stocks away from low profit, dilutive peers. […more]
Corporate America is chugging along and reporting strong earnings. For the SP500 index, 87% of its members have reported actual 21Q1 EPS above estimates, well above the five-year average of 74%. In aggregate, SP500 companies’ […more]
US market returns in Q2 were once again dominated by the top 5 market cap stocks following blockbuster earnings reports in April. In 2020, AAPL, MSFT, AMZN, GOOGL and FB (FAAMG) combined to represent nearly […more]
“We’re redefining what value is. The term has been tortured and confused with cheapness.” Mr. Resendes says. In our view, growth and value can coexist and regardless of what a price multiple/cheapness indicator might imply, high multiple companies can be undervalued in terms of their overall valuation. […more]
While Applied Finance has long advocated for investors to consider the strategic advantages from incorporating a valuation-based discipline in portfolio construction and stock selection, this study provides compelling evidence that even passive allocations benefit when index weights are formed on intrinsic value characteristics instead of using market cap as a proxy. […more]
Looking at the most recent aggregate Valuation data, both the Russell 1000 and Russell 2000 look expensive relative to their long-term levels. On a sector basis, large and small cap Energy stocks, and large cap Utility stocks all seem attractive, while small cap Utilities appear expensive. […more]
The market prices of practically all individual stocks have covered a lot of terrain since the start of 2020, accompanied by a deluge of new information for investors to consider. These considerations include new operating […more]
Applied Finance will continue to monitor and report aggregate market valuation characteristics to help our research partners allocate capital in the current US equity landscape. This update reflects aggregate valuation characteristics based on 4/30/21 closing […more]
Navigating the Current Equity Landscape with an Emphasis on High Profits and High Growth Reopening and inflationary themes conjure many competing narratives on the proper way to build portfolios or allocate capital in preparation for […more]
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