Wednesday, January 18, 2006

Finding Value in Growth

Think large cap not small. Value can be found in growth!

The only way anyone can see this requires belief that value and growth are joined at the hip. I believe and my portfolios show my faith in this premise.

This excellent post shows the relatively low valuation of large cap growth compared to the other "boxes." As someone who generally has espoused small cap value picks, I have to admit how difficult it is to find value in this part of the universe. A few exceptions naturally do apply, but overall, the pickings are slim.

My only problem with this point of view is it seems to be turning into a consensus viewpoint. Yet the valuations speak for themselves.

Don't think that the recent value destruction of a few high tech names represents the demise of growth. In my view, this is strictly a case of expectations having run ahead of themselves and ahead of the fundamentals.

2 Comments:

At 12:45 AM, Blogger The New Wall Street CEO said...

I agree with this post... Value stocks have outperformed growth stocks in recent years. Many stocks historically recognized as growth stocks are becoming the new value stocks. Intel is an example, trading at a trailing PE of 16. Shanda, a stock highlighted on my site, The New Wall Street, is trading at a trailing PE of 14 yet is expected to grow by more than 35% in the coming year. Growth stocks are looking very attractive at this point in time, in my opinion.

 
At 11:49 PM, Blogger Geoff Gannon said...

I also agree with the post. It prompted me to write about the same topic on my blog:

On Small Cap Value and Large Cap Growth

 

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