My investing muse - growth versus value stocks (24Jan2022)
F or some of us, we look at value and growth stocks as 2 sides of the same coin, as 2 separate camps. I n our minds, a high growth stock may not be a value stock and vice versa. let me put in context what criteria I use to qualify stocks as a " value " stock: 1. good financial fundamentals (good trend of revenue, net income, net debt and free cash flow, seen only years and not just in quarters) 2. durable competitive advantage - in branding, price positioning, cost leverage, technology, innovation 3. good management with integrity 4. margin of safety - market price being offered with a discount. this includes calculating the intrinsic value or fair value of the business using FCF or DCF, etc 5. Know the business - as investors, we need to understand the business products and services, the market reach, the industry, etc. some of the high growth stocks promise future profits thanks to their innovations. These cannot be considered valu...