Key insights
- The author expresses difficulty finding undervalued stocks across various sectors, citing high PEs in consumer staples, peak cycle concerns in durables, speculative valuations in SaaS, and questionable forward PEs in AI-related tech. High debt levels and lack of cash further limit opportunities. This suggests a broadly overvalued market with limited upside potential, potentially leading to increased caution among investors and downward pressure on equities if fundamentals don't improve.
Hello everyone, I have at this point checked the financials of hundreds of companies and I genuinely can't find more than a couple of stocks that seems like a decent deal.
Consumer non durables defensive stocks are up there at 20-25PE and growing anywhere between 0-5% a year, consumer durables feel like they are almost all at the peak of their cycle, except maybe cars.
Even potential turnaround stories are discounting the fact companies will come back to full profitability in the next quarter.
SaaS is still divided between stocks that somehow warrant a 100x Sales to market cap and companies that are considered to go bankrupt next year. At the same time most SaaS is plagued with absurd stock based compensations that make me flinch at the idea of considering them.
Most of the companies that might be interesting under an earnings standpoint in the 1B-50B range are plagued with a debt/ebitda of 2x-3x and no cash in hand, and many would not survive a downturn in their own sector.
And then you have AI related tech stocks.
Half of these stocks have a forward PE that does not make sense once you run the numbers and the other half, luckily for them, do not have a PE.
I do understand that this has to do with bond yields being generally terrible for more than a decade, housing being saturated and gold kind of being there.