Bull Market Crocuses: The economy has bright spots. And there are harbingers of market recovery, if you know where to look

The accompanying Big Bull's Watch List (see page 82) contains several dozen stocks, in a dozen growth-industry sectors, that our current work reveals as potential rebound leaders. The list includes big caps and small caps, household names and unknowns, high P/E issues and those still bearing sc...

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Bibliographic Details
Published in:On Wall Street 2003-03, p.1
Main Author: Quickel, Stephen
Format: Article
Language:English
Subjects:
Bull markets
Business forecasts
Economic recovery
Growth stocks
Interest rates
Investment advisors
Investment plans
Online Access:Get full text
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Summary:The accompanying Big Bull's Watch List (see page 82) contains several dozen stocks, in a dozen growth-industry sectors, that our current work reveals as potential rebound leaders. The list includes big caps and small caps, household names and unknowns, high P/E issues and those still bearing scars of the bear. They share two primary qualities we believe all growth stock investors must seek in the coming bull market: extra-strong earnings growth expectations and moderate price/earnings valuations relative to realistic growth expectations. Our current Watch List stocks trade, on average, at 17 times next fiscal year earnings, compared with 14 times year-ahead earnings for the S&P 500. In addition, the average Bull stock is projected to increase earnings by 22 percent a year over the next three to five years. As a result, while trading at somewhat higher average P/Es, the Bull stocks are very attractively priced relative to anticipated growth. Their average PEG ratio (their P/E divided by their three- to five-year growth rates) is well below the one-to-one ratio considered to be ideal. By contrast, the S&P 500's PEG ratio remains above 1.50.
ISSN:1092-1370