Here's what it will take to make stocks a 'great' buying opportunity | Fintech Zoom – World Finance
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It was an interesting time for the best weekly gain for Wall Street since late 2020 as the devastating war in Ukraine grinds toward the one-month mark.
“Stabilizing stock markets point to less cautious investors. Not because views on geopolitical or policy/rates risk have improved but because price action shows a market more tolerant of those challenges,” notes Stephen Innes, managing partner at SPI Asset Management, in a note to clients.
Onto our call of the day, which refutes the idea that some big-name companies are looking like bargains.
“Just because they have worked off some of the extremes in terms of valuation, it does not mean that they’re cheap enough (healthy enough) to make them a great buying opportunity,” Miller Tabak + Co.’s chief market strategist Matt Maley told clients in a note.
Maley said some pundits say the problems markets are facing now or going forward have been “priced into” markets. But that doesn’t alter what he sees as high valuations for many stocks on a historical basis.
So “fabulous companies with bright prospects,” such as Apple
AAPL,
Microsoft
MSFT,
and Nvidia
NVDA,
are “still at valuation levels that have only been exceeded in the last decade during the period between March and the end of last year,” said Maley.
“In other words, it took a historic and MASSIVE stimulus program to push these stocks to their extreme levels of valuations…and their recent declines have only made them ‘less expensive’…not ‘cheap,” he said.
Even the hardest-hit stocks, such as PayPal
PYPL,
and Netflix
NFLX,
are still not cheap by historical standards, and none of the above names have reached the late 2018 lows, or even close to what was seen in 2008/09 or 2002/03, said Maley. Nvidia, for example, is trading at 46 times forward earnings — far above…
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You can read this complete story at: https://www.marketwatch.com/story/heres-what-it-will-take-to-make-stocks-a-great-buying-opportunity-11647860929
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