If you’re looking to put money to work, make sure you’re looking across the ocean. So says Brian Levitt, Sr. Investment Strategist at OppenheimerFunds.
Considering Europe has only started to improve while the recovery in the U.S. has been underway for quite some time, Levitt’s outlook may seem counterintuitive. However, for investors putting money to work in stocks, Levitt says it’s a mistake to think about the two economies as good and bad.
Instead he says think about them in terms of better and worse. And new data suggests Europe is improving at a faster rate that the U.S. (For example, economic growth in the euro zone overtook the U.S. in the first quarter, posting its fastest rate in almost two years.)
“It’s not to say the marco environment in Europe is better, it’s to say things are improving at a better rate than the U.S.,” Levitt said. And, he added valuations remain compelling.
That, too, may sound counterintuitive considering some markets in Europe have generated gains of 20% or more over the past 6 months.
Levitt however, says, again it’s a matter of perspective. And digging down into the economy, he sees every reason to justify current valuations and then some.
“Bank credit growth is positive and European exporters are returning themselves to profitability supported by the weaker currency. While price to earnings may look elevated we think earnings will grow and (a year from now) valuations won’t look as extended.”
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