The Argentine firm Puente has just published its Global Equities Report, a short and effective document that summarizes its outlook for the coming months and recommends being highly selective to avoid short-term risks.
Puente‘s vision for the U.S. stock segment looks optimistic for 2025 but more modest compared to the previous year, in a scenario where growth is expected to slow down and the interest rate stands at 4.5%. This continues to favor global fixed income, they indicate, given the high nominal yields that result from it.
The asset management company prioritizes sectors such as energy, technology, industrial, and financial, but with a focus on companies with strong fundamentals, high dividends, or lower valuations (“value”), to reflect that short-term risks have not yet dissipated and that selectivity remains crucial.
“Stock valuations are ‘expensive’ compared to their historical averages, with the price/earnings ratio for the next 12 months of the S&P 500 at 22.1 times, exceeding the historical average of the last 5 years (19.8 times) and the last decade (18.2 times). Meanwhile, the consensus analyst estimate for the S&P 500 stock index projects a level of 6,510 points by the end of 2025,” says Puente.
The January Snapshot and Earnings Season
The main U.S. stock indices saw widespread gains in the first month of the year, with the S&P 500 reaching a new all-time high. In this regard, the Dow Jones led the trend with a 4.6% increase, followed by the S&P 500 with a 2.3% rise, and the Nasdaq climbing 0.7%. With these results, the indices have accumulated gains of 4.1%, 2.5%, and 1.1%, respectively.
According to analysts at Puente, the corporate earnings season for the fourth quarter of 2024 is well underway, as 62% of the companies that make up the S&P 500 index have reported their financial statements. So far, 77% of these companies have reported earnings that exceeded analysts’ consensus projections. In terms of revenue, 63% of companies have surpassed quarterly revenue expectations.
“Thus, companies have reported a year-over-year earnings per share (EPS) growth of +16.4% to date. On the revenue side, a +5.2% year-over-year increase is evident for the quarter. The outlook for this year appears favorable for equities in general. For the first quarter, EPS growth of +8.7% year-over-year is expected, along with a +4.5% increase in revenue,” the report states.
Puente believes that the upward trend will strengthen, with stronger performance in the second half of the year, as long as macroeconomic conditions remain stable. Thus, EPS growth of 13% year-over-year and a 5.5% increase in revenue are projected for 2025.
