Research

Costco (Ticker: COST) bottomed after it posted disappointing earnings in May 2022, but since then the stock has more than doubled. At the same time, its price-to-forward earnings has expanded from 31x to 50x. While we can certainly appreciate many merits of Costco’s unique business model, it strikes us as a lofty increase in valuation

What Is the Bear Case? Last week we wrote about the Bull Case for the US equity market (SEE HERE). We outlined that a combination of the average stock having gross margin expansion, the early phases of Fed accommodation, the US deficit essentially helping mega-cap US equities, the specter of incremental China stimulus, and some

Up 23% Year-to-Date The S&P500 and NASDAQ are up 23% year-to-date, and the majority of portfolio managers we speak with believe the market will end the year higher than current levels. There is a long list of concerns from a risk-taking perspective, including potentially over-optimistic estimates for 2025, geopolitical uncertainty, a polarized and difficult-to-forecast US

Most investors have exposure – either explicitly or through bottom-up stock selection – to the key themes that are likely to grow above GDP for the next couple of years or more. While it would be ideal if everything we liked went straight up, prudent risk management requires tracking the correlation of returns of these

We have a meeting every day where we are asked about small cap stocks. We have recently written about mega / large cap value (LCV) investing and compared large-to-small cap. value (SCV) investing for asset allocators. SCV stocks have cumulatively performed in line with (LCV) stocks since the Financial Crisis but have lagged the S&P500 materially since 2019. SCV

It Used to Be Easier for Value Investors For many years, value investors would buy dips in stock prices, believing in investment cycles, which translated to predictable mean-reverting profit margins and valuations for many value stocks. If a stock was in an industry where demand and supply are cyclical, investors could gauge changes in demand

29 Days to Go One of the most challenging subjects to write about for people who analyze US equities is politics. However, following the Vice-Presidential candidates’ debate this week, and our 45-minute Zoom conversation last Wednesday, October 1st with former five-term Congressman the Honorable Harold Ford Jr. (CLICK HERE, Passcode: I6ZvuMP%) we have received several

Many cross-asset investors have been arguing they like small cap stocks over large cap stocks, citing extreme valuation and the Fed cycle as catalysts. Last week, we focused on large cap value stocks, arguing that they may have less upside given their lower beta, lack of Financials in the universe (if investors think rates will help),

This Week Is Better than Last Week When the China stimulus was announced this week, our initial reaction was that this is a new and incremental positive. Some investors have been waiting for a stimulus announcement for several quarters, so the timing this past week was surprising, and we have concluded the intervention is incrementally

With recent interest rate cuts, many investors are seeking insights on Mega/Large Cap Value (LCV) stocks. Our analysis dives into the current state of this sector, characterized by a number of viable investment options and significant changes in market dynamics. Changing LCV universe: The number of LCV stocks has dwindled to just 65, as the Financials