Earnings season is about half way over as 228 of the S&P 500 companies have reported second quarter 2014 results as of July 28. Since the latest economic recession occurred six years ago, many companies have cut costs and gone a long way to become leaner, more efficient operators.
This has resulted in profit margins that are high from a historical standpoint and have allowed companies to continue to grow their earnings despite having relatively stable sales. This earnings growth has allowed companies to remain evenly valued from a historical standpoint as JPMorgan noted recently that U.S. large cap stocks are actually 3.4% cheaper than historical averages with a current price to earnings (P/E) ratio of 15.6 as of the end of the second quarter vs. the 20 year average P/E ratio of 16.2…
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