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Is it time to trim US equities as valuations soar?
by Robert St George on Dec 09, 2013 at 14:28
The scope for improving margins further is even more pronounced in certain sectors. Industrials have operating margins at the moment of 14.3% compared with 16.7% in 2007, while in financials the present number is 24.9% against a high of 40.2% six years ago.
Shatney’s base case for 2014 has earnings per share growing by 8%, and she concludes that the S&P 500 therefore still offers 9% of upside. Even in her bear case earnings per share will increase by 5%, suggesting a potential upside of 6% next year.
For Shatney, then, the US is ‘a utopia for equity investors’.
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