Investment Learning

  • October 21, 2024

Why this portfolio manager prefers value over growth stocks

Brian Mulberry, Zacks Investment Management client portfolio manager, joins Wealth! to discuss why he prefers value stocks over growth stocks. Mulberry explains that the valuations of the "Magnificent Seven" are getting "a little bit top-heavy." He tells Yahoo Finance, "The S&P 500 (^GSPC) right now is trading the broader market at about a 22 times forward valuation when you're looking at earnings there. If we concentrate that down into the Magnificent Seven, it's still in the mid-to-high 30s. When you can look at the earnings growth that's expected in a place like utilities (XLU) and their forward P/E (price-to-earnings ratio) is only about 9 or 10, there's a much stronger valuation conversation to be had looking at those particular sectors." He notes that in those sectors, there are better-performing individual stocks that will see "durable earnings growth," offering a better investment opportunity. "So we really feel like you can do better at the current valuation levels if you're rotating back to some of those more traditional value sectors, right now," Mulberry adds, pointing to banks as an example. To watch more expert insights and analysis on the latest market action, check out more Wealth here. This post was written by Melanie Riehl

Read More