No. of Recommendations: 9
The Magnificent 7 might have been magnificent, but they certainly haven’t
been unique. Some have claimed the Magnificent 7’s outperformance
has been attributable to the companies’ superior earnings growth, but our
research has repeatedly shown that such claims seem exaggerated. There
have been many other US and non-US companies with equal or better
earnings growth that investors have largely ignored.
The similarity between the growth prospects of the Mag 7 and the growth
prospects of the remainder of the global equity market that investors have
ignored has now started to favor the remainder of the market. In other
words, the Magnificent 7 can now be considered average growers!
Each bar in Chart 2 represents an S&P 500® company that is forecasted
to grow 25% or more over the next 12 months (NTM). There are plenty
of S&P 500® companies with such growth potential, but only one of the
Magnificent 7 passes that screen.
That one company is Nvidia2, and if one removes it from the Mag 7, the
median forecast for the NTM earnings growth for the remaining 6 stocks
is only 10%. The same median growth forecast for the remaining 493
companies within the S&P 500® is 9%.
Using the Gen Z term, the Mag 7 has officially become the Mid 7.
The Magnificent 7 have become an expensive group that seem to no
longer be unique. Other market segments, like International Quality, now
offer superior growth prospects, higher dividend yields, and cheaper
valuations.
https://assets.ctfassets.net/tpwhn4idgh34/3ZywqfSk... 