J.P. Morgan: Weekly Brief

J.P. Morgan: Weekly Brief

May 11, 2020

Equity
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Growth stocks have outperformed value stocks during this recession as many investors believe that large tech and online businesses will prove more resilient, as people work and shop from home.

While online businesses are clearly less exposed to the current recession than businesses which require people to go out, they may not be as immune to a slowdown in household and corporate spending as some currently believe. Even if they do prove resilient, current valuations suggest that a lot of resilience is already priced into growth stocks. We believe investors shouldn’t ignore valuations when investing in growth stocks.

Valuations on growth stocks are elevated

Price-to-earnings ratios, earnings using 12-month forward earnings expectations

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