How to spot growth and value stocks in a sluggish SA market
Capitec and Clicks are growth superstars, but Shoprite offers an attractive buying opportunity
Growth stocks have consistently outperformed value stocks for the past 12 consecutive years. Investors holding mostly growth stocks over this period have had significantly better outcomes than those holding mostly value stocks. How has this affected value investors?
There are clear distinctions as well as similarities between the MSCI world growth and MSCI world value indices. Growth stocks are companies that are growing their sales and earnings the fastest. Value stocks are those that are the cheapest when measured by traditional valuation metrics (price-to-book ratio, price-earnings ratio and dividend yield). These definitions are used by MSCI to construct its world growth and world value indices. A closer look at the geographic and sector compositions of the indices reveals further distinctions, as well as interesting similarities...