These stocks are seeing falling valuations but improving fundamentals, Credit Suisse says
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Credit Suisse says that although stocks are falling this year, some names saw their earnings rise and now look appealing at the current level. Stock market struggles this year, as investors focus on inflation, Federal Reserve rate-hiking cycles, the war in Ukraine and many other headwinds. The S & P 500 is off about 14% from its high, and the Nasdaq Composite is off by 25.2%. As of Tuesday, the median S & P 500 company has seen its stock price fall 24.4% from its high, while the median price-to-earnings multiple fell 27.5%, Credit Suisse chief U.S. equity strategist Jonathan Golub said in a note to clients. Credit Suisse’s Patrick Palfrey stated in a research paper May 11, that due to the steep and uneven fall in stock prices, certain sectors and portfolio characteristics (factors), have witnessed dramatic shifts in valuations. While some are returning to their normal levels, others continue to show significant discounts or premiums relative market. Palfrey said that market disruptions can create opportunities. Credit Suisse identified 50 of the most successful companies, with lower earnings per share and drawdowns from their peak. Here are 10 companies on this list. Credit Suisse. April 24, 2022. Credit Suisse reports that the most significant drawdowns have occurred in the technology, discretionary and communications sectors. Twitter is the only name on this list. After Elon Musk, a billionaire made an offer to buy Twitter, the social media platform was a regular feature in news. Twitter’s earnings per share have increased by 53%, despite it being down 52% since its peak. Nvidia, a semiconductor stock has seen its share price slide despite improving fundamentals. Nvidia shares have fallen roughly 52% since their peak but earnings per share at the chipmaker have increased 19.2%. With improving valuations, Walt Disney is also a laggard. While the stock has dropped more than 50% since its high, EPS is up 46.3%. Credit Suisse also lists Nike, Expedia, and Salesforce on its list. —CNBC’s Michael Bloom contributed to this report.
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