Matthew Miskin on Buying America: Small/Mid-Caps, Industrials, and Earnings Growth

Market Outlook and Investor Sentiment

• 💡 Many investors are hesitant to enter the market due to a fear of all-time highs, a sentiment Jason Swag highlighted.
• 🎯 Despite this fear, earnings growth is identified as the primary driver for future returns.

US Equities and Sector Focus

• 📈 The S&P 500 is approaching its previous high multiple, with significant double-digit earnings growth expected in tech, healthcare, industrials, and communication services for 2025.
• 🇺🇸 John Hancock Investment Management favors US high-quality companies with strong earnings growth, advocating for a "buy America" strategy amidst a recent "sell America" trend.
• 💰 Mid-cap and small-cap stocks are highlighted as currently being the only relatively cheap equity options globally.

Valuation and Growth Strategies

• 📊 The PEG ratio (Price/Earnings to Growth) is used as a disciplined metric to avoid overpaying for growth.
• ⚠️ While some market pockets are expensive, they often lack earnings growth, necessitating careful selection.
• 🧩 Mid-caps may not have as robust earnings growth but offer cheaper multiples, making them attractive for potential turnaround stories.

Key Sectors and Opportunities

• 🛠️ Industrials are noted as a top-performing sector, driven by infrastructure development like data centers, offering earnings growth at reasonable valuations.
• 📉 Sectors like real estate, consumer discretionary, and consumer staples are identified as potentially overvalued without sufficient earnings support.
• 🏥 Despite recent downturns, healthcare continues to show strong earnings growth, presenting an opportunity.
• 📈 Utilities are also demonstrating good earnings growth, with some reporting 14% increases this quarter.
• 🌍 Political and trade headlines are creating pockets of value and earnings growth opportunities for astute investors.