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The valuation gap between cyclical and defensive stocks reached historic highs recently. Causeway portfolio manager Ellen Lee spotlights opportunities in undervalued cyclicals.

 

Key insights

  • Driven by risk aversion and negative interest rates, defensive stocks are historically expensive relative to cyclicals, in many cases surpassing GFC levels.
  • By focusing on valuation, investors can benefit from a renewed focus on company fundamentals.
  • Value stocks, including many cyclicals, are primed to rebound.
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