Oppenheimer analysts said in a note Monday that better-than-expected Q1 S&P 500 earnings and the recent pullback in stock prices brought P/E multiples of several key US benchmarks back to attractive levels.
The investment firm notes that with four-fifths (401 firms or 80%) of the companies in the S&P 500 index having reported Q1 results, earnings are up 5% overall on the back of 4.2% revenue growth.
"Of the 11 sectors, eight show positive earnings results with three sectors posting double-digit earnings growth and three others showing negative double-digit earnings growth," explains Oppenheimer.
However, they also note that last week’s nonfarm payroll report and ISM surveys suggest the economy may have slowed in April.
Furthermore, they believe the industrial sector exposure to agriculture, manufacturing, artificial intelligence, energy, construction, infrastructure, aerospace, and defense "should remain attractive" as economic growth shows sustainability and "the global supply chain moves away from one-country centricity."
Oppenheimer continues to favor cyclical over defensive sectors, while established technology companies whose products and services are deeply embedded in the lives of business and consumers are "likely to prove to be key holdings."