A Bit Too Much Bounce
The extraordinary bounce in the US market has not gone unnoticed. Perhaps not appreciated are the spots that are bouncing the most. After a sharp selloff in the fall, culminating with the collapse in December, by some measures semiconductors stocks are now at their richest valuation versus the market. First, a look at what might have been, and may well be, the state of fundamentals for those with a valuation framework.
Source: CNBC
The collapse in semiconductor shipments and global manufacturing growth suggested a revaluation of technology stocks in general. Whether a leading, coincident, or lagging indicator versus global manufacturing, continuing strength in the semiconductors appears associated with an increasingly strong view on the resumption of global manufacturing growth.
Another way to Lose Money in Auto Stocks
The big automakers, particularly those in the US and their suppliers, have been a graveyard for many value investors. Manufacturing, supplying and even financing autos has not been profitable. Are ride sharing companies just another way to lose money in a sector whose fortunes are eventually tied to the auto sector? Maybe. Lets’ first allow the benefit of doubt and look at what other call the new metrics.
Prices in excess of ten times revenues are rare. Constructive views on Uber and Lyft imply a complex bet on not only revenue growth, but also when margins might expand in what many view as a commodity business.
Source: INC Magazine
Where accounting numbers fail, some idea of value could come from the lawyers.
Source: INC Magazine
Lastly, the technical analysts do not appear to offer much comfort in valuation with what some see as the foreboding taxicab formation.
Lyft
To review previous market perspectives, click the following links:
- Forecasting Future Oil Prices & New Economy Stocks
- Mega Health Insurers and Signals From The Global Bond Market
- Searching for Value in Front of a Recession
- Airlines, The Oil Market and The Quality Asset
