Maltbie's Minute on the Market: Selective Decoupling Ahead

Robert Maltbie |

For Singular Research's 2012 outlook, we see the broader market in a seemingly eternal tug – of war between countervailing forces, the fear of Euro contagion and decelerating EPS growth, starting with Q4 negative Q/Q EPS comparisons with a backend of the year pickup vs. attractive valuations & corporate buy backs & mergers and acquisitions. Tomorrow, we'll be highlighting some of the top names we like for 2012.

With EPS yields on the market sparking further equity retirement as strategic m & A will re-accelerate as the US economy decouples from Europe. We believe an improving employment picture will increase confidence, lifting money velocity from 30 year lows providing an upside surprise in 2012 GDP, possibly to a 3% growth level.

In the small cap realm, at present, the market appears fairly valued, as our longtime market proxy- New Horizons funds trades at 1.5x S&P 500 levels. Thus, selectivity will be rewarded and will favor growth over value in a slow growth environment with an eye on strategic takeover candidates. We are still finding growth at a discount as our median stock under coverage trades 11x our 2012 EPS estimate with a 7.6 EV/EBITDA and 22% expected EPS growth.

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Singular Research

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Companies

Symbol Name Price Change % Volume
RDS.A Royal Dutch Shell PLC American Depositary Shares ( 52.81 0.05 0.09 3,286,963

Comments

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