Saturday, October 3, 2015

WHERE IS THE VALUE ?


Growth is undervalued by the market today.  The lowest quartile in Reinvestment Return (RR) has a median VR of - 9% while the top quartile median is +11%.  There is little difference across the Yield quartiles but when added to RR, we get an even higher discrimination over the combined IR (Inherent Return) which is RR + YLD

Low Payback shows the best disparity in value of +54% vs +31% for IR

The ratio of Estimate/Normalized earnings  (EM or E/M) shows the best values at the least attractive end of the range while the small Market Caps are more undervalued that Large Caps by 7%.

NB Quartile ranks go from low to high.

Value by Sector is summarized in this table -


The best values are in  Basic Materials, Financial and Industrial Sectors while the worst is the Utilities.


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