3 ASX sectors with stocks that have growth at a reasonable price
Australia equity sectors with growth at a reasonable price: healthcare, industrials, utilities (Siwat Nakmai)
.png)
Macrobond Financial
The RBA and other central banks are grappling with an inflation-growth dilemma. Uncertainty around if inflation has peaked, or if the proverbial sledgehammer of higher rates needs to be used further makes it a challenging time to find diversification with Duration.
Vigilant investors might consider a GARP (Growth at a Reasonable Price) strategy that seeks stocks with high growth but low valuations as a part of their asset allocation. Such stocks tend to offer desirable diversification as this method delivers the balance between growth stocks and value stocks.
Consider the chart above, where we compare forward-looking earnings growth expectations from brokers in the second 12 months vs the next 12 months (STM v NTM). On P/E valuations, a 10-year time window is chosen instead of a 5-year time window to smooth out some exceptional Covid effects. Healthcare, industrials and utilities appear to be comparatively more attractive than the ASX 300. On the contrary, non-energy materials looks to be expensive compared to expected growth expectations.
What’s more, for the US as seen in the chart above, unlike Australia, the telecommunications sector is more appealing than the broad US equity market (Russell 3000). On the other hand, consumer cyclicals and business services have lower potential growth and are overvalued.
Therefore, by applying the GARP strategy, we can identify some attractive equity sectors in Australia—while also comparing them to the US—that offer high growth prospects at reasonable prices, and avoiding those that have low growth expectations but are overpriced.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Macrobond delivers the world’s most extensive macroeconomic & financial data alongside the tools and technologies to quickly analyse, visualise and share insights – from a single integrated platform. Our application is a single source of truth for all your data needs. In addition to our core database, the platform also provides a direct connection to third-party premium providers & even your own proprietary & internal data.
Macrobond’s analytics & visualisation tools streamline building & updating charts, saving hours of repetitive work manually recreating assets each time new data is released. Whether you’re an asset allocator or portfolio manager we enable you to collaborate effectively across your organisation and with your clients.
........
All written and electronic communication from Macrobond Financial AB is for information or marketing purposes and does not qualify as substantive research.
All opinions expressed in Macrobond webinars are those of the presenters and do not reflect the views of Macrobond Financial AB.
The views and opinions expressed here are those of the author/s and may not represent the views of the company.
.png)
4 topics
Macrobond Financial
Macrobond delivers the world’s most extensive macroeconomic & financial data alongside the tools and technologies to quickly analyse, visualise and share insights – from a single integrated platform. Our application is a single source of truth for...
Expertise
Macrobond Financial
Macrobond delivers the world’s most extensive macroeconomic & financial data alongside the tools and technologies to quickly analyse, visualise and share insights – from a single integrated platform. Our application is a single source of truth for...
Expertise
Comments
Comments
Sign In or Join Free to comment
most popular
Equities
The 7 zombie companies lurking on the ASX 300
Livewire Markets