Oklo stock tumbles as Financial Times scrutinizes valuation
Investing.com - Citi has adjusted its investment strategy for the fourth quarter, leaning more heavily into cyclical stocks while reducing its overweight position in growth stocks, according to a research note released by the bank. The firm indicates this shift gives its recommendations a "falling rate but stable macro bias."
The bank’s strategy focuses on cyclical stocks that demonstrate resilient or inflecting growth, improving revisions, and attractive valuation setups, with secondary consideration given to stocks that benefit from falling interest rates. For growth stocks, Citi has become more sensitive to valuations while maintaining preference for companies with premium earnings trajectories and improving margin metrics.
Citi maintains an underweight position on defensive sectors, with exceptions made for companies showing strong fundamentals at reasonable valuations. The bank emphasizes it is "not shying away from risk" but is shifting toward more cyclical beta exposure for the fourth quarter.
Sectors receiving overweight recommendations from Citi include Financials, Information Technology, and Utilities. The bank has positioned Consumer Staples and Industrials as underweight sectors, with the Industrials underweight primarily driven by a non-cyclical industry group within the sector.
The strategy adjustment aligns with Citi’s recent conditional rate correlation analysis, suggesting the bank is positioning portfolios for an environment where interest rates may continue to decline while economic conditions remain relatively stable.
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