大家该出手了 Euro Bailout Obsession Causing Investors to Miss Stellar Earnings Season# Stock
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Concern about an effective European bailout has decimated U.S. investor
sentiment, causing them to ignore an earnings season that shows stocks offer
a great value right now, some traders and strategists are starting to say.
Photo: Oliver P. Quilla for CNBC.com
The worst-case scenario right now is “waking up to news that European
policymakers have run out of time to develop a rescue plan for their
financial system,” said Nicholas Colas, chief market strategist for
ConvergEx Group, in a note. “Stocks are still cheap, even if every bear on
every name has it fundamentally correct from an earnings standpoint.”
On average, 60 percent of companies in the S&P 500 [.SPX 1229.53 14.14
(+1.16%) ] are beating earnings estimates since the third-quarter
reporting season began this month, according to Bespoke Investment Group.
Numbers for revenue are coming in even better.
Yet, the average stock price move following each of these earnings reports
is a 0.4 percent drop, according to Bespoke.
“We are in a no man’s land whereby valuations are cheap, but macro-
economic concerns continue to dominate the investment landscape,” said Alan
Zafran, partner at Luminous Capital. “Burning garbage and steams of
demonstrators in downtown Athens give me less confidence that my shares of
Fifth Third Bancorp [FITB 11.73 0.10 (+0.86%) ], Google [GOOG 588.13
4.46 (+0.76%) ] and Intel Corp. [INTC 23.964 0.354 (+1.5%) ]
are going to move sustainably higher in the near-term.”
The negative headlines from across the Atlantic caused investors to yank
money out of equity mutual funds for a fifth straight week, according to the
Investment Company Institute. Investors pulled $7.5 billion out of stock
mutual funds for the week ending Oct. 12, more than the $3.9 billion outflow
during the previous week.
Work by ConvergEx's Colas shows that investors are bailing at a time when
stocks may be way undervalued. The strategist calculated a price-earnings
ratio using the single lowest earnings estimate from analysts for key
companies such as Apple [AAPL 391.92 -3.39 (-0.86%) ] and Pfizer [PFE
19.055 0.325 (+1.74%) ]. Even after using the estimates from the
biggest bears on Wall Street, the market has a multiple of just 12 times for
2011, still historically low.
More investors may have started to come to this realization on Friday. The
Dow Jones Industrial Average [.DJIA 11719.03 177.25 (+1.54%) ] jumped
more than 200 points at one point on better-than-expected earnings from
McDonald’s [MCD 91.45 2.44 (+2.74%) ].
“There is nothing in this earnings season so far that supports a U.S.
recession ,” said Michael Murphy, managing partner at hedge fund Rosecliff
Capital. “Although the European headlines are making for a wild ride, lets
remember the market is cyclical and this European financial crisis will
pass. We are a lot closer to the end than we are to the beginning.”
sentiment, causing them to ignore an earnings season that shows stocks offer
a great value right now, some traders and strategists are starting to say.
Photo: Oliver P. Quilla for CNBC.com
The worst-case scenario right now is “waking up to news that European
policymakers have run out of time to develop a rescue plan for their
financial system,” said Nicholas Colas, chief market strategist for
ConvergEx Group, in a note. “Stocks are still cheap, even if every bear on
every name has it fundamentally correct from an earnings standpoint.”
On average, 60 percent of companies in the S&P 500 [.SPX 1229.53 14.14
(+1.16%) ] are beating earnings estimates since the third-quarter
reporting season began this month, according to Bespoke Investment Group.
Numbers for revenue are coming in even better.
Yet, the average stock price move following each of these earnings reports
is a 0.4 percent drop, according to Bespoke.
“We are in a no man’s land whereby valuations are cheap, but macro-
economic concerns continue to dominate the investment landscape,” said Alan
Zafran, partner at Luminous Capital. “Burning garbage and steams of
demonstrators in downtown Athens give me less confidence that my shares of
Fifth Third Bancorp [FITB 11.73 0.10 (+0.86%) ], Google [GOOG 588.13
4.46 (+0.76%) ] and Intel Corp. [INTC 23.964 0.354 (+1.5%) ]
are going to move sustainably higher in the near-term.”
The negative headlines from across the Atlantic caused investors to yank
money out of equity mutual funds for a fifth straight week, according to the
Investment Company Institute. Investors pulled $7.5 billion out of stock
mutual funds for the week ending Oct. 12, more than the $3.9 billion outflow
during the previous week.
Work by ConvergEx's Colas shows that investors are bailing at a time when
stocks may be way undervalued. The strategist calculated a price-earnings
ratio using the single lowest earnings estimate from analysts for key
companies such as Apple [AAPL 391.92 -3.39 (-0.86%) ] and Pfizer [PFE
19.055 0.325 (+1.74%) ]. Even after using the estimates from the
biggest bears on Wall Street, the market has a multiple of just 12 times for
2011, still historically low.
More investors may have started to come to this realization on Friday. The
Dow Jones Industrial Average [.DJIA 11719.03 177.25 (+1.54%) ] jumped
more than 200 points at one point on better-than-expected earnings from
McDonald’s [MCD 91.45 2.44 (+2.74%) ].
“There is nothing in this earnings season so far that supports a U.S.
recession ,” said Michael Murphy, managing partner at hedge fund Rosecliff
Capital. “Although the European headlines are making for a wild ride, lets
remember the market is cyclical and this European financial crisis will
pass. We are a lot closer to the end than we are to the beginning.”