Not for the faint-hearted. Lehman is making the case for shifting away from growth stocks and towards value. Which means financials. Just as Meredith Whitney gets going on her latest round of predicting outsize writedowns. Lehman doesnât believe that the period of growth outperformance has yet ended, so this is a tactical rather than a wholesale strategy shift. But earnings downgrades have been almost exclusively targeted at value stocks. The prospect of a slowdown has yet to reflected in the outlook of growth companies. Meanwhile, on Lehmanâs measures, the universe of deep value stocks has become dominated by the financial sector: As such, a view on value necessarily comprises a view on the Financials. We think that the sector will rally from here, that it offers extreme value compared with its history and it has gone through a period of intense downgrades, with signs of moderating downgrading activity over the past two weeks. Finally, the bank adds, growth stocks no longer look cheap. High growth stocks now trade on a 50 per cent premium to their low growth counterparts. The result is a very European-heavy, financials-heavy list of names. Hereâs their top 20: http://ftalphaville.ft.com/blog/2008/04/14/12296/citi-ubs-co-deep-deep-value/
Yeah right, really interested in stock recommendations from a bankrupt broker. It's like asking the poor to show you how to get rich. Funny how all these bankrupt brokers are clubbing together to recommend each other.
Those forward pe's and book values don't mean anything if people decide to stop paying on their loans.