Golub reasons that investors aren't paying enough for a growth premium, so expensive large-cap stocks will outperform the pack if the equity market rallies. This seemingly illogical strategy might just work.
Here are 10 of the most expensive S&P 500 stocks based on forward earnings multiples. They receive terrible ratings from analysts, with low proportions of "buy" ratings. But, they will probably be the first stocks upgraded if economic growth picks up.
10. Regions Financial (RF) is a commercial, retail and mortgage bank. Its second-quarter loss widened to $277 million, or 28 cents a share, as revenue dropped 16% to $1.9 billion. The gross margin climbed from 4% to 11%. Regions has $7.4 billion of cash and $18 billion of debt. Its stock trades at a book value multiple of 0.5, a sales multiple of 1.2 and a cash flow multiple of 3 -- 60%, 35% and 68% discounts to industry averages. Of analysts following Regions, two advise purchasing its shares, 17 recommend holding and four suggest selling.Bullish Scenario: Credit Suisse (CS) offers a price target of $10, implying an advance of 35%.
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