Quick Takes: The Case for Cyclicals – Causeway Capital

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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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