..meanwhile you have stocks like Palantir which is expensive on these metrics but continue to rally higher on strong growth prospects.
..the market does not care that it is very expensive, which shows just how much it pays attention to fundamental metrics
..at some point, this valuation can be unsustainable but it is also conceivable that the market will continue to give it the premium valuation it enjoys as PLTR is poised to be one of the key beneficiaries of Trump 2.0 in AI contracts for defence.
..fact is market always favour stocks with strong growth prospects even though they are expensive but less so on cheap yesteryear stocks deemed legacy (yes, oil and coal stocks are perceived legacy stocks). You may get dividends on the latter but you are denied good capital returns.
..on our ASX, you see that with PME (growth) as opposed to CSL (value), yet CSL makes considerably more profits than PME. A $10k invested in PME would be $113k today, but a $10k invested in CSL would be just $10,068 ($68 excl dividends).
..traditional investors are heavily focused on brick and mortar conventional value stocks that produce dividends and earnings year after year, though growth is miniscule. But value has underperformed growth for a long while now. And will probably stay that way for the foreseeable future.
The best performing stock in the S&P 500 this year?
Palantir, up 369%.
$PLTR It entered the year with a P/E Ratio of 190 and a Price to Sales Ratio of 18.
Today it's trading at over 400x Earnings and 70x Sales.
