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Monday, June 13, 2005

Growth stocks outperforming value stocks

Karyn McCormack writes in BusinessWeek Online blog that growth stocks have started to outperform value stocks.

Gunning for Growth
BusinessWeek Online
Karyn McCormack
June 08, 2005

Brian Gendreau, investment strategist for ING Investment Management points out in his most recent research note that the Russell 1000 growth index has risen by almost 7% since Apr. 20, when the S&P 500 index hit a low. Meanwhile, the Russell 1000 value index has risen 4.8% and the S&P 500 has gained 5.4% since that date. In fact, Gendreau says, growth stocks have been beating value stocks during the entire second quarter, reversing a trend that has lasted for most of the last five years.

This is not just a fluke, says Gendreau. He argues that growth stocks will continue to beat value stocks, based on three indicators. First, the yield curve spread has been flattening, which is typical in economic expansions. The second indicator is high capacity utilization. The third sign is earnings yield.
Read further:
BusinessWeek Online: Well Spent: Gunning for Growth

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