This time Macquarie:
When growth is value and value is growth
A growing valuation dispersion is raising interest in low multiple areas. We worry that valuation reflects earnings risk and not potential multiple upside. We recently wrote that the potential for growth to continue to grow at any price (see Back to the Future, May-17). Conditions that supported this stand have not altered despite an increasing valuation divide. Until it becomes clear that risks around areas that have been discounted – such as banks and consumer – are stabilizing, we cannot see a lot of upside because on relative value they are becoming more appealing.
