Key points:
- Surprisingly, given the fact that the U.S. is by far the largest market (~54% of the developed market cap and ~40% of the global market cap), the top 20 U.S. market cap stocks are also growing faster than the top 20 stocks elsewhere.
- The 18% median EPS growth rate over five-years for U.S. stocks is the best in the developed world, and second to only Russia/Turkey across all 47 developed/emerging markets.
- In the developed world, the top 20 U.S. market cap stocks also have the second highest five-year sales growth rate and pretax margins are tied for the fastest projected earnings growth rate next year and highest ROE.
- Compared to the emerging world, the top 20 U.S. companies are tied for second in pretax margins and remain first in ROE.
- Given the superior growth and low interest rates which have fueled valuations, it is no wonder the U.S. market is among the best performing over five years.
- On valuation (forward 12-mo P/E), the spread between the S&P 500 and Asia/Europe/Emerging is at ~15-year highs.
- While the setups argue for a reversion trade, similar to the value/small-cap trade in the U.S., a reversion in favor of international markets that lasts longer than a couple of months is unlikely without a pickup in growth relative to the U.S.
