USA Stock Consideration Report – January 2019
The corrections that took place in the last quarter of 2018 moved the market from an overvalue tilt to an undervalue tilt and opportunity. Many of the stocks that were overvalued, classified as SELL/SELL WATCH moved back to reside within the fair value range. Thirteen percent moved out of SELL/SELL WATCH to HOLD. HOLD grew from 62% to 67%. Just as overvalued stocks moved back into fair value, fair value stocks fell into undervalue. Eight percent of the overall market moved into BUY/BUY WATCH classification.
USA Market Forecast 2019
The past year (2018) was not kind to investors, but the market entered the year overvalued and was expected to perform below the long-term average. Unfortunately, as the year progressed, overvaluation pressures increased and eventually investors realized that expectations would not be achieved. The market is now slightly on the undervalued side of a normal valuation range. In 2019 we expect the market to perform slightly better than the long-term average at 8.83%, but not as well as the mid-term average.
Investment Strategy Today
USA LargeCap stocks continue to move to the Undervalued side of market neutral range and now are nearly 4 points under 100% fair value at 96.1% Fv. Nineteen of the thirty-six sectors are now under this level which is 63.3% of the total market. Eight of the ten LargeCap sectors are now below this level and on the undervalued side of 100% Fv, but still in market neutral range. Selling has gone well beyond rational levels.
Investment Strategy Today
USA LargeCap stocks move to Undervalue side of market neutral range at 99.3% Fv. Twenty-seven stocks move into Buy Watch range while fourteen return to fair value range after being considered overvalued.
Investment Strategy Today
Adobe earns an increase in fair value due to higher rankings in revenue and earnings. Altria Grp earns a Buy consideration while HCI Grp earns a Sell consideration. Hold consideration continues to grow as previously rated Sell/Sell Watch consideration stocks drop back into fair value range. The market is back to market neutral valuation at 103.5% Fv for the total market, 101.1% for LargeCaps.