The S&P 500 is trading around 12X 2012 ‘earnings’. That’s pretty attractive by historical standards. But when you break it down by sector, some look cheaper than others.
Take a look at the P/E ratio of the various sectors (Zacks divides the S&P into 16 sectors; all data is taken from Dirk Van Dijk’s weekly “Earnings Trends” article):
To put those P/E’s into perspective, also take a look at the wide range of earnings growth by sector:
After a tough 2011, Industrial Products look cheap to me. These stocks sold off sharply during the recession scare in late summer/early fall. But those fears have largely subsided, and the earnings picture still looks strong. This has made for some attractive valuations within the group.
For you top-down investors, which sector(s) are you overweighting in 2012?
To read this article on Zacks.com click here.
Zacks Investment Research
