📑 Research Notes for 2021-08-09
This week, we look at moderating inflation, a record number of stocks trading at 15X earnings, and current valuations on ESG stocks.
We conduct extensive investment research and share the most interesting content that we come across every week. Here is a curated list of this week’s top observations.
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Inflation Breakevens Are Moderating.
(Econbrowser)
As of yesterday, the five year inflation breakeven was 2.5%, down from 2.72% in mid-May. The estimated inflation risk and liquidity premia adjusted 5 year breakeven was 1.62% as of 7/30 (when the corresponding actual breakeven was 2.56%).
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The Number of Stocks Trading at 15X Sales Hits a Record.
(Novel Investor)
Investors sometimes pay a high price for lofty expectations. A good example of this can be found in the number of companies trading at over 15x sales. Since 2000, an average of 181 companies traded at over 15x sales in any given week (with a minimum $100 million market cap and not trading OTC). Today that number hit 600. The last time we saw numbers remotely close to this was 2000 when it peaked at over 400 companies.
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ESG Stocks Are Not In A Bubble.
(Financial Times)
The rush by investors of all stripes to prioritize environmental, social, and governance goals have raised speculation of an emerging bubble in favored stocks. But the shift to ESG appears to be still in its early innings. Investor positioning in sustainable equities is not yet overextended.
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Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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The information presented in this newsletter is for educational purposes only and is not a solicitation or recommendation for any specific security, product, service, or investment strategy.
Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a qualified financial advisor, tax professional, or attorney before implementing any strategy or recommendation you may read here.