Many US technology companies use stock compensation to help align workers’ performance with shareholder interests.
The recent selloff of US growth market darlings reflects increasing questions about whether their growth potential still justifies exceptionally high valuations. Away from the froth, growth investors can still find solid return potential in quality companies with profitable, sustainable business models.
Investors don’t often pay much attention to corporate culture. But cultural norms can make the difference between success and failure, especially for growth companies.
As an unprecedented number of US companies suspend earnings guidance, equity investors should rethink the overly precise game of predicting short-term estimates.
US healthcare is always a political hot potato, and volatility is expected to rise as the November elections approach. But investors can find good opportunities in the sector in companies with strong long-term business drivers that are relatively immune to political noise.
Investors continue to question whether US equity valuations are too high, particularly for growth companies and versus other global markets. But standard valuation metrics don’t tell the whole story. Understanding the cost of capital can provide essential insight on valuing stocks.
Technology unicorns are in the spotlight, with Uber’s high-profile IPO expected this week. As scrutiny of their business models intensifies, we think investors should also ask tough questions about publicly traded companies with high sales growth but scant cash flows.
Many US companies have enjoyed an earnings boost from premium products in recent years. But a strong sales mix may leave a company’s profitability vulnerable in the late stages of an economic cycle, when spending trends begin to weaken.
With US stocks facing multiple risks, it’s easy to lose sight of the positive trends that could help the market recover. In 2019, investors should search for select stocks with the right attributes to produce positive surprises in a potentially tricky market environment.
Recent volatility in equity markets has certainly increased anxieties for many investors. But we believe in being prepared and ready to exploit volatility—to position a portfolio for what will drive excess performance over the next three to five years.
US corporate debt has surged over the past decade. As rates begin to rise from historic lows, focusing on quality companies with healthy balance sheets can help equity investors avoid danger zones.
After October’s sharp market declines, many investors might think US stocks look relatively cheap again. But equity valuations require closer scrutiny, and earnings metrics might be distorting the fundamental performance of businesses.
Asset prices have far outstripped the underlying fundamental performance of many businesses, and that may pose challenges for investors now that developed economies are beginning to normalize interest rates.
What we’ve seen is so many different types of strategies raise tremendous amounts of capital that are competing for performance. And many of those strategies have absolutely no connection to the underlying asset.
Corporate investments are the cornerstone of future growth. Yet shareholders are often seduced by buybacks and dividends. Equity investors should always make sure companies strike the right balance between deploying cash flows for short-term shareholder rewards and strategic reinvestment.
There’s a curious anomaly in the US stock market. Shares of highly profitable companies have risen more slowly than their earnings growth has in recent years. This is an important signpost for investors in today’s complex market conditions.
Equity investors appear to have voted in favor of US tax reform. But the optimism may need to be tempered. We believe that the impact of the tax overhaul on individual stocks will be mixed and will depend on several factors.
Equity investors are facing a moment of truth. Is the stock market going to crest? Verifying the quality of portfolio companies today can make the difference between success and failure if conditions get tougher tomorrow.
Investors are wary about US stock multiples. But elevated valuations of high-growth stocks may be deceiving. Growth overachievers that can deliver persistent fundamental strength often make a mockery of their short-term valuations in hindsight.
With the S&P 500 Index touching new highs, where’s the US equity market heading? Our US portfolio managers addressed five big questions that are on investors’ minds about valuations, opportunities and risks in the market today.
Proposed US tax cuts—if they happen—would be a nice boon for corporate bottom lines. But for most companies, the boost to underlying earnings power would likely be fleeting. To find tax-reform winners, look for the exceptions.
As earnings season rumbles on, analysts remain fixated on the bottom line of company reports. But earnings tell only a partial story. There’s a better way to identify businesses that can generate long-term growth.