Many Wall Street analysts point to the expensive market—especially amid uncertain times—as a key reason for downside ahead.

After all, the S&P 500 (^GSPC) price-earnings multiple is up 55% over the past five years, increasing from 10.5x to 16.2x currently. It’s not surprising that many investors would question the sustainability of this rise.

But RBC’s Jonathan Golub said multiples could expand even further.

Cash Flow Generation: Companies have become much more efficient, Golub explained, and are generating over 20% more free cash flow from every dollar of earnings.

Return of Capital: Right now, the S&P “total yield”—which is dividends and buybacks—stands at 4.7%, higher than 4.4% for the 20-year corporate bond. In other words, stocks are undervalued on this metric relative to alternatives.

Volatility: Golub explained that volatility has been running 30% below normal. “This should equate to a similar reduction in equity risk premia,” he said.

Overall valuation Trends: Equity valuations tend to move from low to high and back over very long periods, Golub said. “With multiples well within a normal band, the current swing higher appears far from over.”

Few Excesses: Golub explained that at this point there is not one sector that is “unreasonably priced.” While energy sector multiples remain elevated due to falling oil prices, valuations aren’t over stretched across sectors—even in consumer staples.

The bottom line: While the S&P multiple taken by itself may appear stretched, the underlying dynamics in the market speak to more upside. Meanwhile, it’s attractiveness relative to bonds and international equity markets remains attractive.

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