Hyperscaler capex is spreading across the world.
And Japan in particular is benefitting.
Japan has been top 5 ranked country in the Global Factor Model for years, but this month it’s #1. Over the US. Over China.
We will look at Japan, but first let’s go over the Top 30 ranked companies on our combination of estimate momentum, valuation and price momentum.
At the bottom of the post are links to the updated datasets:
YWR Global Factor Model Retool Data App
YWR Global Factor Model Ranking Sheet
Global Top 30
In the Top 30 we see familiar trends; refining, shipping, precious metals, semiconductor supply chain, and memory.
Our factor model captures that refiners and shipping stocks show rising earnings estimates with low valuations. Valuations are low because investors struggle with the ‘sustainability’ of these record earnings. They struggle to put a timeline on the Iran War. Does it get solved next month? Or, is the Middle East chaos for the next 5 years? I’ve had conversations with many investors in the Middle East and Europe, and there isn’t any conviction either way.
Memory stocks also trade on surprisingly low P/E’s despite the best earnings growth in the world. Why is this? If I summarise what I’ve heard in conversations it is often the same thing. Investors have made lots of money, want to take profits and not ‘give it all back’ in a sector which has been epically cyclical. On the other hand memory is the most important challenge to scaling AI inference. Memory is the key bottleneck and where cutting edge new solutions are needed. The risk reward on SK Hynix looks good here. Especially, now that leveraged retail investors are out.
Note Core Civic is a data funny. Estimate revisions are rising on the back of a one off sale of 4 prisons for $2.2 billion to ICE. It’s a reminder the data scores are useful, but we still need to do the fundamental work.
USA Top 30
For the US degens we also put together the USA Top 30 list.
