...absolutely agree, capital intensive business that requires large capex commitments are subject to cost blowouts due to higher input costs from inflation.
...and add the high interest rates to discount future cashflows, returns become highly sensitive to product pricing and pricing certainty.
This chart from Goldman Sachs is eye-opening: Asset-heavy stocks have underperformed a great deal. Given the accelerating pace of innovation so apparent all around us, it’s tough to suggest that investors should shun capital-light industries that continue to compound such impressive returns. However, the opportunity to find winners amongst asset-heavy stocks seems increasingly clear.
