Despite market concerns that the post-Financial Crisis bull market in U.S. stocks may finally be coming to an end, Jefferies analyst Sean Darby believes the United States is nowhere near a recession. While the current economic expansion has been extended, Darby believes the country remains the world’s economic “gold standard.”
“The US has reasserted itself as the dominant global economy and will continue to grow in 2016 despite another disappointing first quarter,” Darby explained.
As a result, Jefferies is anticipating that the S&P 500 will deliver a single-digit gain this year and reach 2,180 by year’s end. From a valuation perspective, Darby noted the S&P 500 currently has a forward PE of 16.7, a PB of 2.6, a forward ROE of 15.8 percent, a dividend yield of 2.2 percent and forward earnings growth of 7.5 percent.
For now, Jefferies is focused on three macro ideas when it comes to the market: FCF yield of most sectors is higher than treasury yields, the number of companies with rising earnings estimates has climbed two quarters in a row and about a third of S&P 500 stocks currently have higher dividend yields than bond yields.
Darby mentioned…
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