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Cheap … cheaper … energy stocks

Apr 26, 2023

With the publication of robust earnings from tech bellwethers Microsoft and Alphabet yesterday, the result season appears to progress pretty much according to expectations so far. Consensus believes S&P 500 earnings will be down some 6% during the quarter. In terms of valuation, US tech does not look particularly attractive compared to the market and its own 30 years history. However, energy stocks remain a clear out layer as they currently trade at a 40% discount to the market overall. US energy stocks have been cheaper less than 5% of all the considered periods over the last 30 years. We therefore believe energy remains one place to look at for investors searching for undervalued businesses.

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