Is Walt Disney Co. a value stock? Many believe it is, since it satisfies many of the criteria for a high-quality stock with relatively low valuation. Prior to the pandemic, for example, Disney’s forward-looking P/E ratio was around 16— below that of the S&P 500 SPX, +1.34% .
Furthermore, she added, Netflix’s earnings will likely be more predictable over the next couple of years than Disney’s. Predictability of earnings is a trait more associated with value rather than growth investing. Running out of stocks for S&P indices Wreaking havoc on traditional quant investing is just one of the underappreciated ripple effects of the coronavirus on the stock market. Another, according to Houssels, will be to reduce the pool of stocks eligible to be included in the various S&P indices.
Not only will this reduce the number of companies eligible to be included in the S&P indices, it may lead to an outright reduction in the total number of publicly-traded companies. That’s because, Deluard argues, the cash-rich “tech mega caps” should be able to “simply ‘name its price’ and buy any company they like.”
Up until now, the S&P 1500 index has not been affected by this shrinkage. But one side effect of the coronavirus pandemic is that even these indices will be affected.
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