DITHF - EWU Vs. EWUS: In The U.K. We Find Small Caps Much More Compelling

2024-01-22 10:08:03 ET

Summary

• While UK stocks are currently valued lower than their U.S. counterparts, a closer examination reveals concerns such as stagnant financial and energy companies with limited growth potential.
• In contrast, UK small and mid-cap companies show more promise, offering slightly higher valuations but with significantly greater growth potential.
• Despite economic and political uncertainties in the UK, including the impact of Brexit and currency devaluation, there's potential for investment opportunities, especially in the small and mid-cap space.

We are hardly the first ones to point this out, but UK stocks are looking very cheap, especially when compared to current valuations in the United States. Still, when we look under the hood, we don't particularly like what we see. There are a lot of stagnant financial companies, cyclical companies in the mining and oil sectors, and other companies that we don't think have much growth potential. That said, when looking at small and mid-cap companies, we find slightly higher valuations, but a lot more growth potential....

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