Merrill Lynch: Own the beneficiaries of disinflation
"I still think we are in a slow-growth, disinflationary world. A disinflationary world means you want to own companies that don’t require price increases to grow their revenue lines. Historically, the two sectors of the market we can invest in that do best in that kind of environment are Technology and Health Care. They’ve already done well. I think they will continue to do well. The two sectors, by the way, that do the worst in that kind of environment are Energy and Materials. They live for price increases, and in a disinflationary world, it’s hard to get them. In the Technology sector, most of the large well-known companies have very good free cash flow. In Health Care, the mainstream, established multi-product biotech companies, of which there are four or five in the market, are selling at valuations comparable to that of the S&P 500, but with much stronger growth, much better free cash flow and very strong unit growth." Read the whole research report which sources the viewpoints of four former Merrill Lynch strategists… (VIEW LINK)
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