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Six reasons why the US stock market is still the place to be (SPX, SPY, QQQ, USD)

Posted March 15, 2015 11:00 pm

Akin Oyedele

RBC Capital Markets is bullish on US stocks.

"Non-U.S. markets are expected to see slightly faster earnings growth over the coming year," RBC strategist Jonathan Golub wrote in a note Monday.

"However, developed ex-U.S. has missed lofty expectations by a wide margin in each of the past four years."

Also, e<span style="line-height: 1.5em;">xpectations for earnings growth in Europe have been sharply revised downward this year. </span>

Here's why US stocks will outperform in the coming years, according to Golub:

<ol>

<li>US economic growth, as measured by GDP, has outpaced other G10 economies since the end of the recession and is forecast to keep doing so, as the chart below shows.</li>

<li>US companies have been more likely to meet their forecasts for earnings growth than other developed countries over the past several years.</li>

<li>US stocks have more exposure to faster-growing sectors like technology and health care.</li>

<li>Higher US yields support higher valuations for stocks.</li>

<li>Price-to-earnings ratios tend to move in tandem with the dollar, and will climb if the dollar rally continues.</li>

<li>Adjusting for sector mix, US stocks are not expensive versus the rest of the world.</li>

</ol>

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