Stock Fair Value Brief: Volume 1, Issue 5
There is no doubt returns for American stocks have been exceptional in 2017. Earnings continue to support valuations and expectations are not excessive. There are many factors that influence market returns of which fair valuation is one. Given the current valuations for the market overall and most sectors within those markets, there is a reasonable expectation that markets can support continued growth in value. Expecting a repeat of 2017 in 2018 might be more hopeful than factual, but there is no expectation that normal returns would not continue for the foreseeable future. Short term fluctuations can always materialize and unexpected events can disrupt markets, but current conditions and valuations support a continuation of favorable expectations.
Stock Fair Value Change Report
SalesForce.com, Incyte and Sanderson Farms all increased in fair value while Mallinckrodt PLC dropped.
Update Economic USA Employment
Employment continues to do well in the U.S. with the addition of 235,000 in nonfarm payrolls. This is better than the previous month in all categories except Midsized businesses. Increases in the small business category is especially important because this is the category where most new jobs are created. Most jobs in larger enterprises are replacement positions, but even in this category the additions were 62,000 greater than previous. Inflation in wages may start to appear in greater earnest in the next 6 months, but for now it is subdued at 2.4% annually. The unemployment rate remains extremely low at 4.1% with 5.27 million new hirings.
USA Stock Consideration Change Report
Armada Hoffler and Welltower move to BUY consideration while Apogee Enterprises, Cloud Peak Energy, Carpenter Tech, and Echo Global Logistics join the SELL consideration list.
Stock Fair Value Change Report
Owens & Minor receives lower fair value due to lower revenues and earnings.