Citi strategist Chris Montagu expects real rates to remain negative in the future, which should provide the basis for the growth of stocks to exceed future performance.
However, rising geopolitical risks and deteriorating fundamentals mean investors must focus on the Low Risk/High Quality end of the Growth spectrum of stocks, Montagu said in a client note sent today.
In companies with high Growth or good Value, the relatively Low Risk ones outperformed in March. This effect is seen in both US and European equities, but is stronger for Value than Growth. This shows that investors became more selective with Value exposure in March, Montagu wrote.
Citi expects that IT and Healthcare will benefit more because of the negative yields and protective characteristics, respectively.
Some growth stocks that meet the Citi (Low Risk/High Quality Growth) standard are: Microsoft (NASDAQ :), ServiceNow (NYSE :), Micron (NASDAQ :), Snowflake (NYSE :), Marvell ( NASDAQ :)), Robinhood (NASDAQ 🙂 :), SoFi (NASDAQ :), etc.
By Senad Karaahmetovic