Growth Investing in 2018 vs Value Investing in 2018
Application form to apply & try and get in my Private Stock Group/Financial Fortress
Today we go in-depth on growth investing in 2018 vs value investing in 2018! Some people prefer growth investing in stocks while other prefer value investing in stocks. Today we will discuss which one is right for you! Enjoy!
Want to join our free STOCKHUB discord chat? Here is the link
This is where you can chat for free with other investors in the stock market about individual stocks or things going on in the market. Enjoy!
*My Instagram is : FinancialEducationJeremy
This is a Jeremy Lefebvre Production
Created by Jeremy Lefebvre
Growth investing in 2018 versus value investing in 2018. These are two opposite investing principles. Some people are more growth investors, some people are more value investors, we’re going to talk about what the differences are between these two, okay.
We’re also going to go through different companies that you can invest in, if you’re more of a growth investor, or if you’re more of a value investor. And I think today’s video will be very helpful to anybody that’s kind of you know, within their first year of investing in the stock market.
If you’re a more advanced investor and you’re watching this video, I would love to hear from you in the comment section, what what you know, kind of frames that you’re more investing in more growth companies, more value value related companies.
We’re also going to discuss what age group you should really be, you know, investing in each one and whatnot. So growth versus value, let’s really talk about this guy’s, you know, people are usually very passionate one way or another.
They think value investing as a way to go, they think more growth investing, we’re gonna talk about both into depth, this is definitely going to be a video I want to take my time with, and not rush through it. Because, you know.
You definitely want to understand the differences between the two, growth versus value. So growth versus value, you know, I personally, what am I? Am I a growth investor? Or am I a value investor, I kind of balance the two.
I lean a little bit more over here. But I also do this and I’m going to teach you toward the end of the video exactly where the magic is made, where you can actually buy a company that looks like a value company, but it actually has significant growth.
I’ll teach you that toward the end of the video. So a growth investor, they care mostly about what’s going on with those revs. Okay, revenue, what is the top line revenue revenue is also known as top line, okay, they’ll say the top line has the top line at that company doing how’s the revenue doing? Okay.
They don’t care as much, okay, they don’t care as much about profits. Okay. You know, that doesn’t mean nearly as much profits, especially in the short term, you know, maybe the long time you know, long down the road, they care more about profits, or P e ratios, okay.
P the price to earnings multiple. And profits are usually more secondary things to a growth, investor growth, investors really care about revenues and most and the other thing they also really love is gross margins. Okay.
They really love a gross margin that’s expanding, okay, they love a gross margin that is expanding, but they really love those revenues that are growing up, they don’t care as much about profits. Okay.
That’s more secondary and P e ratios where that company is actually valued at based upon what they earned last year, or even if they you know, look at it a four p basis what that company is expected to earn.
In the future year growth, investors don’t care as much about that. It’s more about revenues and more about what’s the gross margin expansion there, okay. Especially when it comes to tech companies, where’s the value investor, a value investor is going to put a few things First and foremost.
They’re going to put the P e ratio, okay, they’re going to put the P e ratio. First and foremost, don’t worry, I got new markers coming in this week from Amazon, guys, these markers are all dying on me, it’s not too fun.
So they’re going to care more about p e ratios, and they’re going to care more about profits, where’s the profit trending, okay, they’re gonna care about profits. Now, the secondary stuff for a value investor is gonna be revenue.
So we’ll say don’t care nearly as much about revenues, that’s going to be really, really secondary, gross margin, they do kind of care about that, we could kind of put that maybe in the middle. But it’s not nearly as big the P e ratio value investors gonna, you know, be big time.
Which is one of the reasons you can tell I’m a value investor, I always bring up forward p e ratio, I like to talk about that all the time, when I’m looking into a company, I’m always paying attention to what the forward p e ratio.
These people generally won’t touch companies that are unprofitable, okay? If it’s unprofitable, they don’t want it. All right, if it’s unprofitable, they don’t want to, you’re not a value investor, if you’re investing in unprofitable companies, right.
Because the whole point of being a value investor is buying companies that are very profitable, and especially when you compare it to what their market cap is at all right, so that’s a value investor. That’s a value investor right there. All right.
Now value investor. So what they’re gonna, you know, money’s coming in, you know, both these guys money’s coming in, and for these guys, money is going to be growing to these growth stocks, okay.
Whereas these people, their money is going to be going straight into value stocks. So what are some examples of each one? Well, on a growth investor, they’re going to be more in the names like let’s say the Netflix Okay, trying to remember all these ticker symbols off top my head.
I think that’s Netflix and f l x. If I were called Netflix, they’re gonna also be in something like an Amazon, okay, they’re gonna want to be in something like Amazon, maybe even Facebook, although Facebook now is starting to get to a place where you can make an argument that might even be more to value side than growth side.
At this point in time. We can also think about Nvidia, Nvidia would be another name, that would definitely fall under the growth, the growth category, maybe even Dropbox, something like that, which is a new IPO company.
That’s definitely obviously a growth name there. Maybe even Spotify, some of those names, whereas value companies, you’re looking more at Apple, okay, Apple would definitely be more of a value play, we can think about something like, you know.
Google almost kind of gets lumped in the value play, even though they actually have pretty nice growth. Google sometimes can even be more of a value name for a lot of investors out there super profitable, fairly low 40.
And it actually does have really nice growth still now. Maybe even like something like a Walmart might be thought about Disney stocks like that, okay, these stocks don’t have massive growth. Google would be definitely the fastest grower then but Apple.
Nice growth and profits, maybe not nearly as much on the top line, but very nice growth and profits, Disney Walmart, some of those companies more value related, where you maybe you don’t have to pay up for the huge p e ratio, but they’re a little more value in name, okay.
Now, these the difference between these two guys, is these ones also like dividends, okay? These ones really liked to make money, okay, get paid out money every single month, a value investor really loves dividends. All right.
So we’ll raise some of this now. And we’ll get into on the on the next part here of value versus growth. These guys over here, they love receiving money all the time, okay, where these growth investors, they don’t care nearly as much about that.
All right, whether a stock pays a dividend or whatnot, doesn’t mean anything to a growth investor, these guys love to get dividends, all right? dividends, he loved to get that dividends and that money goes into their accounts.
All right, and they get to invest that money back into more value stocks, all right, they get that money paid out to them. Every single wall, usually every three months by the companies that dividend they found that money back into more value stocks.
Those value stocks, pay them off more dividends, okay. And guess what they do, they return that money back to buy more value stocks, hopefully, as long as their companies can increase profits over time.
And as long as their companies, you know, continue to pay out whatnot, they just build their positions bigger and bigger and bigger. And guess what they get more in dividends, more in dividends more in dividends.
And as the time rolls on 10 1520 years down the road, the amount of dividends you start getting is ridiculous, okay? whereas these guys, they’re mainly trying to you know, get capital appreciation, okay? It basically meaning stock go up, okay, in its simplest way.
Capital appreciation is a stock going up, okay? The stock price going up. So they buy, you know, they, they get money, however, they get money, okay? over their work or their business or whatever, they funnel that money into stocks, okay.
Those stocks hopefully go up in value, okay, they go up in value. And guess what, they end up selling that stock many times, and they take the profits from that stock they just sold, and they go and buy the next stock, okay, they sell.
They buy the next stock in, that’s how their money funnels, okay, they take the money and invest in a stock, hopefully it goes up a lot, because the growth stock and everybody wants to jump in and whatnot, they go sell that stock, they buy new stocks, and hopefully win more money.
So maybe they had $10,000, maybe now they made it into $15,000. Now they put $15,000 into the next stock, and they build their portfolio that way, where these guys, they’re more about, you know, buying and holding, not necessarily forever, you know.
All over maybe somebody like Warren Buffett might be more interested in that. But they’re definitely planning more long term holding, okay, they’re really planning on holding that stock for a long time.
These guys really only care about holding it until the growth kind of leaves once the growth starts dying down, or they feel like the growth might start dying down. Soon, these guys are getting out, okay, they’re selling out of that position, whether they made money lost money, anything.
Then they’re kind of getting out of it, because they don’t want to hold it until it’s a value play, right? If that company’s growth starts dying? Well, you know, regardless of what P is that they don’t really care, they want to get out of that they don’t want to be in a value stock.
They’re not a value investor, they’re a growth investor, they want to be in the next one that’s going to grow revenues 3040 50% next year, not the stock that might only grow revenues, 5%. But now it’s trading at a 14 for PE, they don’t want to be in those types of stocks. Okay.
So there’s nothing wrong with either those. It’s just a different mentality. These ones are more like trying to get dividends, will their stocks go up? They definitely hope so they want to, you know, there’s their shares to become more valuable over time.
But really, they love receiving those dividends and those dividends, but it can buy them more shares. These guys love for their stocks to go up, they sell them off, they buy new shares, okay, so that’s the difference kind of between these two.
Now, let’s talk about age groups. And then we’ll talk about kind of how you can end up I guess you could say how you could end up buying a value stock that’s really a growth stock. We’ll talk about that toward the end.
Now what age group should you be at for each This is done A big debate out there. So if you’re younger, let’s say 20s and 30s, okay, 20s and 30s, you’re gonna more than likely want to be more over on this side, okay.
Because you’re more focused on building wealth, okay? Not to say, you know, value stocks are a bad way of building wealth because they’re not, you can definitely build wealth, but you’re a little more willing to take more risk.
When you’re younger, okay, it’s natural, you’re willing to take more risks. Now there’s a, there’s obviously a level at which you can start to get to stupid risk, okay, where you start to get in speculative companies that might grow 100% next year, or might not.
You can start getting into some really risky stocks, right, where it almost starts, you know, becoming a gamble at that point in time. So you don’t want to go too far. But you’re willing to take more risk, because you’re more focused on building wealth, you’re, you know.
The company that pays a 5% dividend yield, that the shares might only go up for four or 5%, this year, is not too appetizing for someone that’s trying to really build wealth and might want to try to get into a stock that’s going to grow 2030 40% this year, okay.
So there’s a big difference there, values plays is really going to be for 40 Plus, okay, the ones that are 40 Plus, because these ones don’t want to take as much risk, okay, it’s not as much about, you know, making 50% on their money this year, okay.
If big money comes, big money comes, but these ones don’t care about big money, they care almost more about not losing big money, okay? Sometimes these growth companies, that is a value companies can’t ever go down because value companies absolutely can go down.
And they do go down sometimes, okay, but a growth company can go down 50% in a year, okay, a growth, I mean, you will look at tons of growth companies, that also they go down 50% in a year’s time, okay, meaning you, let’s say you had $100,000 in that stock.
Next thing, you know, your shares only worth 50,000 in a quick amount of time, because all of a sudden, that growth went through the floor, and they couldn’t grow the company anymore, or the growth slowed down in a big way.
They went from, let’s say, growing revenues, 40% a year, or 40%, a quarter or whatever, and now suddenly go down to 15 to 20% of the gross investors are saying, whoa, whoa, whoa, whoa, we don’t want to be in those anymore.
This is this is starting to become more of a value company and a growth company, we don’t want this anymore. Okay. So these guys over here, but the value investors, you know, 40 Plus is definitely the you know.
Where you want to start shifting some more your money toward value rather than growth, because it’s not nearly as much about building wealth. As in, you know, when you’re younger, it’s more about building growth, you can take some more risks.
This is kind of like, you know, you’re probably in your best earning years at those ages, you know, depending on how things went for you and whatnot. And so you’re probably making a lot of money.
And it’s not necessarily about trying to build that money into so much money. It’s just about trying not to lose too much money in make that money into some money. Okay. That’s what it’s about.
Now, how do you do it where you can go ahead and get growth names, but for value prices? How can you do this? And I’ll even give you an example of why I could give you several examples of companies I’m involved with right now that are really valued like a value stock.
But they actually have some huge potential growth. How do you go ahead and find it? Okay, well, you want to look for companies that have low forward p E’s. Okay, low forward peas. And this is, obviously, when you’re talking about low 40s.
You’re talking about, you know, that are under what the market is trade now. So right now, oh, gosh, I think the four peas on average are somewhere around 16 or 17. Right now, okay, somewhere around 16 or 17.
Last time I looked for peas are around on the s&p 500. Okay, so meaning you’re probably gonna want to find 1514, you know, 1210 Ford peas on some of these companies. All right. There’s definitely a lot of them out there, right.
But the problem is, not all of them have growth. But what you want to look at the ones that really have long term growth stories to them. Okay. So although right now, they might not be going growing, right now.
No growth, okay, or very little growth. And so they’re not seen as a growth company right now. Right now, they’re not seen as growth company, there’s no growth with that stock or interview with that company. Right.
So right now, they’re not growing, but they actually have long term growth that people aren’t looking at, to the stock market mostly judges things off of what’s going to happen with that company right now.
And over the next year, okay, that’s kind of the stock market in its purest form, they’re really focused on what this year and next year long term growth with most stocks, you know, people don’t have the time to really look into something like.
an Amazon where such a big huge corporations in everybody’s face and people are using it. Sometimes, you know, those type of sock can, you know, get focused on the long term growth, but the majority of stocks out there are too small or they’re just not focused on enough people.
Don’t understand the fund managers don’t understand enough to really be focusing on what the company has going forward 234 years from now, okay. So that’s where, you know, a lot of fund managers don’t funnel money into all these stocks that have some long term growth engines going for it.
So for instance, I’ll just use one example of one Stock I hold right now, which is a company named Cirrus Logic. Okay, Cruz cruzi doozy, this stock right now has a Ford P of I think somewhere around 10 on it right now. Okay.
Ford P is somewhere around 10. Right? This stock right now is not growing at all, it has no growth right now. So the stock that’s valued super low. But when you look at the next two to three to four years of the stock, they have massive long term potential growth out there as long as they execute.
Because some of the chips they have going for because of the the content expansion into other customers. And also, they can still grow content with Apple with the voice by a mixers, Chip and a lot of different things coming in the future.
Then you think about all the different devices they have going forward in the future. So right now, it looks like wow, that’s company can’t grow. But then you start looking at it from a 234 year perspective.
And you’re like, wow, that company has massive growth ahead of it. But it’s a super small company. So most people don’t really have the time to look into a company like that, and focus on what it has going for 234 years.
And most people don’t want to take that risk because a growth investor, they want to be in something that’s growing right now. Okay, in a big way, right now. It’s not necessarily about 234 years from now, it’s about what it’s doing right now is that growth, you know.
Expected to pick up as the year goes on and things like them, growth investors, so when crews gets to a place where all sudden that hopefully they execute on that long term growth, and they start exploding, then all sudden, all these growth, investors start jumping in it.
Because cruise revenues also start going up 3040 50%. And everybody’s like, let’s get into this. And obviously, then the value investors are more attractive, because it’s probably still gonna be at a fairly low p, maybe it won’t be a 10 at that time.
But it may be a 12 or 14, you have the kind of the perfect storm of investors wanting to get into fund managers wanting to get into a stock, because I see Wow, this company has massive growth holes and going forward.
And they have a low forward p so they would almost constitute as a value in stock. One last thing value investors really love is they love strong balance sheets, guess what Cruz has, it has a good balance sheet and get tons of cash and investment, no debt on that. Okay.
So when you tie all those things together, also, you get kind of the the perfect storm, the best of both worlds, where you can get a value stock. But really, it’s a growth stock, when you look at it from a long term perspective what that company has going for it 234 or five years from now.
You could also say maybe even something like a sky work solutions, which I hate to, you know, stick on the semiconductors right now. But maybe even a sky work solutions. This one does have growth right now.
It doesn’t have big growth right now, not really, I think they’ve grown revenue somewhere around 10% or so I believe. So it looks like it might not be a big growth play. Anybody then you look at it has a really low Ford e somewhere around 12.
And when you look at the long term growth perspective for that stock, you know, 5g and that expand out, it’s like, wow, this is this is huge potential here, this is huge potential, by the way, skyworks Solutions is a stock that pays a dividend.
So that attracts even more value investors to it. So that’s where the perfect storm can get created. That’s where the that’s where the real big money is made. Okay? When you can find a stock out there.
That’s a value stock that has a proven track record of management executing over the last, let’s say, five to 10 years. But right now, it doesn’t look like they’re growing, it doesn’t look like they’re a growth company right now.
So they get, you know, lumped into just all it’s just a stock, that’s gonna be a nothing stock. And no, that’s why it’s at a 10 pe or whatever. So that’s what you want to find. But really, when it’s a company that has some long term.
Huge growth vectors out there, that you know, is going to attract the growth investors, maybe a year from now or two years from now, it’s the perfect storm. And that’s when you can really amp up your gains into you know, getting huge gains.
And at the same time, are you really taking that big of a risk in a stock like that, let’s think about it, the already low super low fourth E, they have a great balance sheet knows type of things. So you’re already taking away a lot of risk.
Whereas if you’re just investing in straight growth stocks that have, you know, a huge four peas on them, you know, 50 100 for piano, or let’s say, you know, it has no 40 because basically, it’s an unprofitable company, you’re taking a massive risk in those companies.
A lot of time, those companies sometimes don’t have the best balance sheets loaded up on debt. So you’re taking a big risk with some of those. But when you can find value, great balance sheet, low Ford P, and you can find it when it’s got the long term growth.
That’s where the magic happens, guys, that’s where the magic happens. So that’s kind of the best of both worlds. Now, I want to know about you guys, like what are you more focused on? Are you more of a growth investor.
Are you more of a value investor? Do you do it like Nii where you’re kind of you know, you, you sway a little bit to one side, but you’re still looking for the other side. Like I say, I’m more on this side.
I’m more on the value side than the growth side. But I’m on the value side, but I’m also looking for those companies 2345 years out over the next you know, coming years that have big growth ahead of them.
So I definitely do dabble over here. It’s just I’m more over here. Are you guys maybe I’m more on the growth side and less on the value side. I would love to hear from you guys in the comment section. I don’t know if there’s necessarily a wrong answer to it.
I mean, obviously I’m gonna feel how I feel about it. That I think my ways the best way but it doesn’t necessarily mean it’s the best way. It’s just how I feel about it. I would love to hear from you guys in that comment section.
Get a little debate going on. If you’re more growth, value oriented. Both I would love to hear from you guys. Make sure you follow me on Instagram if you haven’t already I got a few premium courses that you definitely want to check out if you’re looking for something like that.
One is my stock market membership group you’ve got again there you can contact me anytime in there. We talk in that group all the time. I share stocks on buying, you know, I share a private account that’s got nearly $100,000 in it.
That is one of my investment accounts that I share with you guys all the time in that group. We have more millionaires in that group than strip clubs in Las Vegas baby so make sure you get in there you owe it to yourself as a first link down there in the description.
I also have and of course for more newer investors, which is called stock market investing mastery. I believe that’s a third link in the description there. Thank you for watching. Have a great day.