S&P 500 Near Record Highs: Is the Stock Market Rally Sustainable in 2026?

**SPEAKER_1** (0:01)
This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

**Justin Klein** (0:16)
Good afternoon, fellow investors, and welcome back to InvestTalk. This is our August 12th, 2026 edition, and a lot to talk about as we have the CPI data today that move markets just a bit. And overall, just a lot to unpack, a lot to discuss. We have geopolitical volatility, we have earnings that are mostly behind us, we're still getting a smattering of that, we're getting mainly a market rotation. So we'll discuss that and much, much more during this hour on my goal.
This hour is to help you become a better investor, give you perspective, give you data, answer your finance and investment questions so that you can take that back to your own personal situation and make better decisions. Not just this week, not just this month, not just this year, but year after year after year. That's how you build wealth, is avoiding major pitfalls, like chasing returns and using your emotions, investing in risky illiquid assets, for example. There are a lot of pitfalls out there, but those are just a few. But then there's a lot of opportunities. It could be AI, AI-adjacent. Every sector has opportunities at any given point. It's your job to identify it, or if you want broad-based exposure to asset class, maybe that's right for you as well. We are here to guide you either way.
Whether you want to keep it simple or you want to build a more complex, robust portfolio. So I encourage you to give me a call. 888-99-CHART is our number. Whatever is on your mind, I'm ready for it. Now, just a bit, I'll talk about today's Mark performance and run down the show topics. But as usual, we're going to tackle this first caller question now.

**SPEAKER_3** (1:58)
Hey, Justin and Luke, this is Eric from Utah, giving you a call about the stock ticker GSK. I know it's had a little drawback lately, but seems to be on a long-term uptrend and just wanted your valuation and if this is a good entry point. Thank you.

**Justin Klein** (2:15)
Looking at GSK, which is GlaxoSmithKline, the company that was the name, I think they changed it. They might have shortened it. You know, there's big corporations. They like to keep everything simple. Maybe it used to be Restoration Hardware. Now it's just RH. It used to be GlaxoSmithKline. Now it's just GSK.
Well, they do R&D. They manufacture pharmaceuticals, vaccines, consumer health products overall, headquartered in London.
So it's a UK company. Earnings are expected to hit an all-time high this year and then another all-time high next year to $5.14, $4.77 this year, up from $4.70 last year. So growth is definitely slowing a bit. And I think that's probably one of the reasons why this is flagging is just the multiples are not that great. Sorry, the growth rates are not that great. Therefore, multiple is not going to be that great. That's how this works. The bigger the growth company, the bigger the multiple. But overall, they are in a restructuring program. So that's what is probably holding them back when you're trying to restructure the business. It's hard to tackle growth and go for growth.
They're holding water while improving their bottom line, improving their margins. Now, it has pulled back, but overall, it's just consolidated since the beginning of the year. Let's see. Closed the year last year right around $49.55, and now we're at $50 bucks. So it's up a percent or so on the year. Not a big mover, but just like I said, consolidating still good business, 32% return on equity, operating margin 25% and that has been headed higher. So they've been doing a good job of creating efficiencies. They have a good balance sheet. Enterprise Value to EBITDA looking forward is at about eight times, which is kind of the midpoint of the last 10 years. So I would say it's not really expensive or cheap. It's kind of fairly valued. Now if you're looking for exposure to the pharmaceutical industry, you definitely could do a lot worse than this.
Like I said, good balance sheet, good business, decent growth, fair price. You're not getting a bargain, but honestly, I don't see anything majorly wrong with the chart that would make me say, stay away, it looks fine. It looks like it's just consolidation period. And then you add in, it's a foreign name. I like foreign exposure. So I'll give this one a mild thumbs up, but I'm also not enthusiastic about it. Yeah, we had a great show yesterday. We looked into the story about the SaaSpocalypse debate, our AI stocks disrupting SaaS in 2026 Talked about the structural risks to the software sector as a whole and the valuations. And we also answered listener questions about General Motors. And if you happen to miss it, go check it out. The best way to get every episode of InvestTalk is to check them out. Check us out wherever you get your podcasts. Now, we have a lot of ground to cover over the next 45 minutes today. And our main focus point is about the S&P 500 near record highs. Is the stock market rally sustainable? We're going to look at underneath the hood of the valuation, of the breadth, the momentum. Let's really keep in this market afloat despite a lot of headlines that catch attention, catch a lot of attention. Okay, so we're going to look at that.