Cheap? In this market? Apparently.
After months of earnings growth doing the heavy lifting, US equities are looking less like a luxury item and more like something you can buy without maxing out the credit card. The headline number here is forward P/E: it’s down to 19.1x, which is back below the S&P 500’s five-year average.
That’s a pretty big mood shift. Prices didn’t exactly crash — earnings just kept growing while stock prices mostly loafed around, and that tug-of-war compressed valuations. If you’ve been waiting for the market to stop acting like every stock was a limited-edition sneaker drop, this is your cue.
The bad news is still bad. The good news is better.
Of course, the backdrop isn’t exactly a wellness retreat. Oil is still high, inflation hasn’t packed its bags, and rates are climbing like they’ve got somewhere to be. But the market is also getting some support from robust earnings revisions and expectations for double-digit growth.
That’s the key investor takeaway: cheaper valuations plus improving fundamentals can be a pretty solid combo, even when macro headwinds are doing their best impression of a drunk guy at a wedding.
Big picture
If earnings keep beating the price chart to the punch, stocks can stay “cheap” for longer than you’d think. And in market land, cheaper is often just another word for less impossible.