Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Stock

Buy US stocks with less demanding valuations: HSBC

admin by admin
September 26, 2024
in Stock
0
Buy US stocks with less demanding valuations: HSBC
0
SHARES
10
VIEWS
Share on FacebookShare on Twitter

Investing.com — HSBC analysts believe investors should look for opportunities among stocks with less demanding valuations as the S&P 500 reaches record levels.

The benchmark index is currently trading at a premium of over 15% above historical averages, and even when excluding major tech and other large companies, valuations remain higher than historical norms. Out of 12 sectors in the index, seven are trading at more than a 10% premium to their historical averages.

Analysts pointed out that the high valuations are largely attributed to the dominance of “big” companies in the index, encompassing not just Big Tech but also big retail, big banks, and big pharma.

These corporations have significantly contributed to the equity index returns this year, with a handful of companies in most sectors accounting for more than half of the sectors’ returns.

“These “big” companies report above-average earnings growth, with average earnings growth 20pps higher than the sector average and above average profitability with most Return on Equities (ROEs) topping 30%,” HSBC analysts noted.

“As such, these “big” companies have been rewarded with premium valuations, trading at forward price-to-earnings of over 30x, on average. “

Despite the current market conditions, HSBC believes that there are still opportunities to invest in companies with less demanding valuations. They have identified a range of buy-rated companies across various sectors, including financials, consumer discretionary, and tech, that trade at a 15% discount or more to their sector averages.

Some of the highlighted stocks include Target Corporation (NYSE:TGT), Biogen (NASDAQ:BIIB), Cisco Systems (NASDAQ:CSCO), Salesforce (NYSE:CRM), Johnson & Johnson (NYSE:JNJ), and several others.

At the same time, HSBC analysts advise against positioning into small caps at this time. They stress that small caps historically tend to underperform following a Federal Reserve easing cycle, which is not typically accompanied by a recession.

With expectations of a gradual easing cycle and additional rate cuts bringing the target range to 3.25-3.50% by the Federal Open Market Committee (FOMC) by September 18, 2024, HSBC anticipates that while lower rates may provide some relief, refinancing for small caps could occur at rates higher than historical averages. Also, the gap in profit margins and ROEs between small caps and their larger counterparts remains significant.

This post appeared first on investing.com

Previous Post

Innovative eyewear Inc insider buys shares worth over $1.8 million

Next Post

Accenture announces $4 billion share buyback as AI powers strong quarterly revenue

admin

admin

Next Post
Accenture announces $4 billion share buyback as AI powers strong quarterly revenue

Accenture announces $4 billion share buyback as AI powers strong quarterly revenue

Trending News

Could the Air India Ahmedabad crash derail its turbulent revival?

Could the Air India Ahmedabad crash derail its turbulent revival?

June 14, 2025
LATAM crypto news: Orionx hits $1 billion in transactions, Bitfinex derivatives relocates to El Salvador

LATAM crypto news: Orionx hits $1 billion in transactions, Bitfinex derivatives relocates to El Salvador

January 11, 2025
5 Important Events to Watch As We Start 2025

5 Important Events to Watch As We Start 2025

January 12, 2025
Subscribe to Insightful Word


    Recent News

    Dow futures soar 250 points today: 5 things to know before Wall Street opens

    Dow futures soar 250 points today: 5 things to know before Wall Street opens

    August 7, 2025
    Affirm stock price is rising: is it a buy before earnings?

    Affirm stock price is rising: is it a buy before earnings?

    August 7, 2025
    Intel stock plunges sharply after Trump calls on CEO to resign: here’s why rebound may take time

    Intel stock plunges sharply after Trump calls on CEO to resign: here’s why rebound may take time

    August 7, 2025
    Goldman Sachs boosts Nvidia price target to $200 ahead of Q2 earnings

    Goldman Sachs boosts Nvidia price target to $200 ahead of Q2 earnings

    August 7, 2025

    Recent News

    Dow futures soar 250 points today: 5 things to know before Wall Street opens

    Dow futures soar 250 points today: 5 things to know before Wall Street opens

    August 7, 2025
    Affirm stock price is rising: is it a buy before earnings?

    Affirm stock price is rising: is it a buy before earnings?

    August 7, 2025

    Latest News

    • Dow futures soar 250 points today: 5 things to know before Wall Street opens
    • Affirm stock price is rising: is it a buy before earnings?
    • Intel stock plunges sharply after Trump calls on CEO to resign: here’s why rebound may take time

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.