Average valuations in the US and Europe, with economic contraction and earnings already implicit in prices. Possibility of improving the multiple depending on the evolution of monetary policy and expected earnings growth for 2024 above the long-term trend.
Prioritize sectors that support a recession or stagflation environment:
- Health: stable income and margins supported by public spending.
- Agri-food: the climate crisis and the war in Ukraine put pressure on food prices.
- Defensive consumption: with the capacity to transfer price increases to the consumer.
- Financial: you benefit from an environment of rising interest rates.
- Technology: Although there may still be volatility, attractive multiples and higher growth than other sectors.
- Cyclical consumption: It usually bottoms out before the start of recovery.
- Renewables: the need to decarbonize drives huge investment plans in renewable energies.