CRS - Carpenter Technology: Excellent Fundamentals; Stretchy Valuations

2024-05-31 13:53:35 ET

Summary

• The Bloomberg Commodity Index has outperformed equities and bonds in the last 3 months.
• Carpenter Technology Corporation has displayed qualified growth in sales and earnings since 2022.
• Valuations currently reflect this excellent performance, and there is downside risk at the current trailing P/E of 30x non-GAAP earnings.
• Rate hold.

Investment Summary

Our strategic view at Bernard Investment Group is that we are well within another commodities super-cycle. We have held this view since mid-2021, when inflationary data surfaced and began to impact global equity markets. The asset class's performance in 2024 has only added to this conviction.

As seen in Figure 1, the Bloomberg Commodity Index has outperformed broad equities and the bond market in the last three months of trading....

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