Stock Picks
Value or Growth? which one of these famous fundamental investment strategies will be crowned king of the ring at the end of the year?
Value is outpacing Growth at the offset of the year, and as interest rates are set to continue to rise, our favorite value stocks could continue to shine.
The Procter & Gamble Company (PG)
This multinational consumer goods corporation ticks all the boxes of a value stock and could continue to tick higher over the year.
The Procter & Gamble Company provides branded consumer packaged goods to consumers across the globe. The Consumer Staple operates in 5 segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
Soaring inflation has been a burden to consumer goods stocks but gauging from Procter & Gamble's (P&G) latest Q2 earnings report, inflation had but a modest impact. Rising prices and strong sales growth dampened rising inflation as well as pandemic headwinds.
- Share Price: $ 159.74
- Market Cap: $ 382.91 billion.
- P/E Ratio (LTM): 28.3x
- P/B Ratio (LTM): 8.7x
- Dividend (Annual Yield %): 2.17%
- 52 Week range low of $ 121.54 and $ 165.54 share high
Key takeaways from the earnings report released on the 19th of January was that net sales grew by 6%, beating expectations. P&G also continued to take market share by 0.6% globally, and one metric to keep an eye on is to see how many of its 50 top brands held or expanded market share. Out of the 50 brands, 37 P&G brands have met that goal so far in fiscal 2022.
Taking a closer look at valuations, P&G plans to grow its earnings per share to 6% in the fiscal year 2022 despite inflation pressures. The stock is currently trading below its fair value by our estimates and is projected by analysts to grow roughly by 5% over the next three years. Another positive is the company's 2.17% dividend yield, which has risen for the last 65 years.
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Growth stocks are staging a comeback and our pick for the month of love is:
With this cloud-based artificial intelligence (AI) lending platform, FinTech has been an EasyResearch stock pick once before and a firm favorite in the growth stock space. In true growth stock fashion, the share price gained over 20% from our selection to where it reached its high in October at $ 401 a share and came tumbling down with the market correction.
Despite the recent downturn, the stock could be every "Buy the Dip" investor's dream to get in on this game-changing tech stock. The company's world-class AI-driven lending platform determines customers' creditworthiness and, in turn, lowers the cost for financial institutions procuring the loans. Recent acquisitions could add to the bottom line moving forward, "the acquisition of Prodigy Software allows the company to become a force in auto loan originations. The auto loan origination market is more than eight times larger than the personal loan market.” - Sean Williams.
- Share Price: $ 117.33
- Market Cap: $ 9.62 billion.
- P/E Ratio (LTM): 118.7x
- P/B Ratio (LTM): 13.4x
- Dividend (Annual Yield %): N/A%
- 52 Week range low of $ 42.51 and $ 401.49 share high
Looking at the latest third quarter (Q3) earnings report, we see revenue jumped 250% year-over-year. It also facilitated three times the volume of loans originated by partners than the year before. Income from operations rose 134% YoY, and Net Income also increased 201% YoY, while the forward guidance for Q4 was also very optimistic and will be reported on the 15th of February 2022.
Upstart Holdings is overvalued by our measures which is a typical trait of a growth stock, and the future Growth and possibilities drive interest. With analyst projection and forecast for future annual earnings growth around 24% over the next three years, interest should continue in the stock.
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Informed decisions
Value stocks might have finally entered the limelight as growth stocks take a back seat at the start of the year as macroeconomic factors continue to play out. We do not rule out the potential of growth stocks to make a comeback this year as the U.S market rebounds from the current sell-off.
For those EasyVSTRs looking to capitalize on the value movement and not waste time picking singles, the iShares MSCI USA Value Factor ETF (VLUE) could be interesting.
With growth stocks set for a comeback, the tech enthusiast looking for a basket to cover the sector, the Vanguard Mega Cap Growth ETF (MGK) could be worth the look.
New to investing
and want to know more about our other stock picks?
Read: Back-to-work stock pick
Sources – EasyResearch, Bloomberg, Koyfin, SeekingAlpha, Forbes, SimplyWall St, The Procter & Gamble Company, Upstart Holdings, Neil Patel, Investopedia, The Motley Fool, Reuters, Wikipedia.
Take note: USD stock data was taken on 01/02/2022.
Follow Barry Dumas
@BEEF_FINMARKETS
Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
