Politics Deutsche Bank expert: That is why value stocks are now worth a look again

05:25  02 november  2020
05:25  02 november  2020 Source:   finanzen.net

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Deutsche Bank , which has been stuck in what its finance chief has called a “vicious circle” of declining revenue, sticky expenses, a lowered credit rating and rising funding costs, is trying to extricate itself by (Updates with the last time Wirecard’s value rose above Deutsche Bank in second paragraph.)

Deutsche Bank saw its shares tank nearly 5% over trading on Thursday, May 24, after it revealed plans to slash more than 7,000 jobs in its Corporate & Investment Banking division by implementing significant cuts to its global equity trading business.

High-growth tech stocks in particular benefited from the circumstances that the Corona crisis brought with it this year. Now, according to experts, value stocks could also be worth a look again.

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• Tech stocks benefited from an ideal environment this year

• Value stocks do better in the upswing phase

• Will the change from growth to value soon?

The current year poses challenges for politics, business and investors in the stock market. The markets were in rally mode until the corona pandemic hit the scene, brought the economy to a standstill and tore the stock exchanges down. In the summer months, all signs were pointing to recovery and important stock indices approached their pre-crisis level again. In particular, stocks that benefited from the so-called "stay-at-home" trend rose during this difficult time.

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Positive comments from Deutsche Bank (DE:DBKGn) (Micron was raised to buy from Deutsche Bank Bucks Wall Street Trend, Makes 'Working From Home' Permanent. All CFDs ( stocks , indexes, futures), cryptocurrencies, and Forex prices are not provided by exchanges but rather by market

View the latest Deutsche Bank AG (DB) stock price, news, historical charts, analyst ratings and financial information from WSJ. Restricted stock typically is that issued to company insiders with limits on when it may be traded. Something went wrong. Please try again later.

But according to Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank , value stocks are currently also worth a look.

Deutsche Bank expert relies on value stocks

Ulrich Stephan has repeatedly pointed out in recent months that he is increasingly investing in value stocks again. In the Deutsche Bank newsletter "Perspektiven am Morgen" on October 21, he cites the reason for this, that the rating is "at an all-time low" after about ten years of underperformance. Among the value stocks are also some companies "with cyclical business models, which usually lead the market in the young economic cycle and should also do so once a COVID-19 vaccine causes more economic optimism among investors."

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A spokesman for Deutsche Bank says that it is confident the vast majority of trading clients understand the group has a stable financial position. US-listed Deutsche Bank shares are now on track for their best day since October 2011 amid Here's a look at how Deutsche Bank has performed so far today

The stock is selling for .13 and its .37 average price target suggests it has room to nearly double in the next 12 months. The losses in 1H20 where normal for SBLK’s pattern – and the outlook for Q3 is a return to net profits, with EPS projected at 30 cents.Covering this stock for Deutsche Bank

The expert explains that analysts went even further and that the companies of the Russell 1000 Value currently attested "higher earnings growth than the corporations of the corresponding index for growth stocks (" Growth ")" for the next two years. So far, this has only happened in four of the past 26 years - most recently in 2010.

Will value stocks overtake growth stocks?

Value stocks are known for outperforming other, higher-valued stocks during certain times of the economy, such as the rebound after an economic crisis. So are investors returning to value investing? In any case, stock market legend Warren Buffett has stuck to his strategy for decades.

Marco Pirondini, Head of Equities and US Portfolio Manager at Amundi, recommends investors to switch to US value stocks in the current situation. Although the environment for growth stocks has recently been ideal, it is considered "unlikely that this ideal environment will last," says "Institutional Money" the experts. He cites inflation as the reason, which has played virtually no role in recent years, but which could flare up again through monetary and fiscal policy incentives. And historically, value has outperformed growth at such times.

It remains to be seen when the hoped-for recovery, which is supposed to give the value stocks a boost, will occur. Because the mood is currently clouding over again due to rising corona numbers - and when a vaccine will actually come on the market is also still unclear. Finanzen.net editorial team

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