2024-06-23 05:24:05 ET
Summary
- The investment landscape has shifted in 2024 and investors must think about positioning moving forward.
- The consumer staples industry is competitive with pricing advantages and capital efficiency.
- PriceSmart, Inc. continues its business growth but could have limited opportunities for substantial economic value creation.
- Earnings multiples are currently high and are susceptible to contraction, leaving little wiggle room to trade higher.
Investment summary
The investment landscape has changed drastically in the past 6 months from one of (i) projected rate cuts, (ii) upward revisions to GDP, and (iii) potential P/E contractions, to one where the market now expects [a] basically zero changes to rates this year, and [2] several downward revisions to US GDP. At the same time, the forward P/E multiple on the S&P 500 Index hovers ~21x as I write, vs. ~16x for the equal-weighted S&P 500 index. The risk for broad equities, as Goldman Sachs says (Figure 1) is the underperformance of the mega caps in earnings and multiple contraction....
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PriceSmart: Little Headroom To Move Past Current Multiples