You are probably familiar with last year’s boom, bust and boom again pattern for broad stock indexes.Based on previous recoveries, B. Riley analyst Craig Ellis argues that investors can reap significant double-digit gains following an expected pullback for the industry.
SOX was down as much as 29% late in March, while the S&P 500 was down as much as 30%. The subsequent recovery was incredible, broadly driven by the federal government’s stimulus and the Federal Reserve’s dramatic moves to lower interest rates and increase the money supply. Now look at the projected growth rates, based on consensus estimates among Wall Street analysts polled by FactSet:
So that could be a warning for large-cap semiconductor stocks — if consensus estimates are close to being accurate, the S&P 500 will show significantly better increases in EPS and free cash flow over the next two years.