Stay Positive on Growth Stocks and Negative on Value: Barclays By Investing.com

Barclays remains firm in its support for growth stocks over value, maintaining a positive outlook on growth in both the US and Europe in a note on Tuesday.

Despite recent weakness in US tech stocks, the bank’s analysts say strong fundamentals and attractive valuations continue to justify the position.

“We maintain a positive view on growth and a negative view on value in both regions,” they said in their note, noting that falling yields removed a key headwind for value stocks.

In the US, Barclays continues to favor large-cap stocks, citing better exposure to quality and growth metrics such as sales and earnings per share (EPS).

Analysts believe the themes align with their positive view of the market.

Large-caps’ “better exposure to quality and sales/EPS growth (themes we are positive on) and much lower leverage/refinancing risk” make them a more attractive choice than small-caps, Barclays says.

Instead, the bank favors small caps in Europe, citing their “multi-decade low valuation” as a key reason for their optimism, despite lower yields not yet fully benefiting the style.

Momentum remains another focal point for Barclays, particularly in the US, where analysts remain bullish on the factor given its strong fundamentals.

“Momentum was the second best performing factor in the US last month,” they noted, reinforcing their position. “We maintain our positive view on Momentum in the US given its strong fundamentals and attractive valuations.”

However, analysts remain neutral on momentum from Europe, favoring growth stocks in the region instead.

In addition, Barclays has a negative outlook on high-volatility US stocks, arguing that these stocks have “mediocre quality exposure” and are relatively expensive.

In contrast, analysts maintain a neutral stance on low-volatility defensive stocks in Europe, suggesting macroeconomic conditions are not severe enough to warrant a move to a more defensive stance.