Why is the E/P spread still elevated?
Investor preference for growth stocks and the high level of companies with negative earnings continue to fuel an elevated E/P spread. History has shown that when this spread reverts to its narrower norm the payoff to deep-value stocks can be significant. Although this reversion is difficult to time, our models continue to identify many attractively valued stocks and we believe that deeply discounted stocks will continue to offer the prospect of strong relative returns in the near future.
Related
Mind The Gap: The E/P Valuation Spread
Read More