It has become a popular observation: investors are paying up for solid, predictable and reliable growth alongside growing dividends. You know, those stocks that don't seem to have any bad days, unlike the resources, the banks and the cyclicals. As I have been arguing since 2008, the new context of low global growth, low interest rates and low inflation favours this particular type of stock. Think CSL, Ramsay Health Care, ARB Corp, Burson Group, et cetera. The big difference between now and years ago is that previously these stocks would outperform in the background, now they are on just about everybody's radar. And today's valuations reflect just that. Is it a fad? Is it a Bubble? Is the burst just a trigger away? Unlikely, in my view, because the overall context remains the same, and this continues to support this particular kind of stock. With good reason too. These stocks are by no means immune against everything, but let's face it: when was the last time you remember a profit warning from CSL? (VIEW LINK)
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