Multi-Industry Companies Near Top Of Historical Valuation Range

Multi-industry companies like General Electric Company (NYSE:GE) and 3M Co (NYSE:MMM) are at the high end of their historical valuation range, but this is also the point of the business cycle when such companies have normally outperformed, and Citi analysts Deane M. Dray and Matthew W. McConnell expect the sector to hit a “fifth earnings season” heading into 2014.

“The sector typically outperforms in the late cycle/Steady Growth phase of the economic cycle. Yes, sector valuation has been pushed to the higher ends of its historical absolute and relative ranges, but fundamentals still look attractive. Upside from here should come less from multiple expansion and more from the expected 2014 earnings growth, fueled...