- Rolls-Royce looks fairly rated
- Marks and Spencer well-placed for upgrades
If you're one of the investors who's made a tidy return on the likes of Marks & Spencer (MKS) or Rolls-Royce (RR) in 2024, then there are probably two questions on your mind: how long should I hold onto these star performers before trimming my position? And; where can I find the next attractively valued large cap stocks with potential catalysts for a positive re-rate? In answering both, we need to take a step back and re-assess our assumptions about valuation, before reminding ourselves of companies' operational and financial fundamentals.
The price-to-earnings (P/E) ratio is the almost ubiquitous tool when considering how cheap or expensive a stock is, but it shouldn't be viewed in isolation. When it comes to relative valuation, against peers and a company's own history, nuance is required.
