- Citi’s global strategy team reveals stock selections for investors who favor companies that allocate a large portion of their capital to payout, rather than capital expenditures.
- Listed below are 10 of Citi’s “cash cow” stocks, which have an accumulative performance 10 percentage points higher than global indices.
With so many available approaches to choose from, the investment landscape has never been more nebulous.
Couple this notion with the current forces affecting investor psyche — such as trade wars, geopolitical tensions, currency devaluations, and central bank activity — and it’s difficult to stick to a plan.
But one Wall Street behemoth thinks they’ve identified a group of stocks possessing a surefire combination of attributes that will lead to outsize gains going forward.
Citi’s “Cash Cows” — or stocks they’ve identified as “highly profitable, capex-lite business that are returning high levels of cash to shareholders” — have been trouncing the overall global market by 10 percentage points so far in 2019. And the firm thinks there’s still room for them to run in second half of the year.
“Investors are expressing a clear preference for payout over capex, paying higher multiples,” Citi strategists wrote in a recent client note. “Although they do not look especially cheap, we think they should continue to generate strong returns.”
Including 2018’s performance for context, the graphs below depict the cows’ outperformance since the beginning of the year.