📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Magnificent Seven stocks aren't too expensive - JPMorgan

Published 03/11/2024, 06:35 AM
Updated 03/11/2024, 06:38 AM
© Reuters.  Magnificent Seven stocks aren't too expensive - JPMorgan

JPMorgan strategists said in a Monday note that the Magnificent Seven stocks are now cheaper compared to the broader equity market than they were five years ago, citing their most recent earnings data.

“The magnificent 7 are again this year driving the disproportionate share of returns, with a clear concern over how sustainable this is, but we note that this group of stocks is not trading increasingly more expensive, at least not in relative terms,” strategists wrote.

“In fact, Mag-7 stocks appear cheaper at present vs the rest of the market than they were trading on average in the past 5 years,” they added.

When viewed in absolute terms, there seems to be an excess, noted strategists, and the Magnificent Seven could also experience earnings shortfalls, suggesting they may be more susceptible to economic cycles.

Looking at the broader market, the growth investment style continues to outperform value, mainly due to its superior earnings performance.

Excluding the Magnificent Seven, S&P 500 earnings have shown a decline in recent quarters “and we believe there are risks to the consensus view that argues for the re-acceleration in earnings this year,” analysts said.

Moreover, JPMorgan voiced concerns over the high valuation of cyclical stocks, particularly highlighting sectors like autos, retail, and travel and leisure, due to potentially weaker consumer trends and the reversal of the previously strong pricing environment.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.