Growth or Value Investing?

GrowthValue
Ratios
Growth Rate5 – 10%
Price Earnings Growth< 1%
Return on EquityHigh
Price/ BookLowP ≈  BV
Price/ EquityHighLow
Dividend / EquityD ≈  E
DividendHighConsistent Payouts

Operating Performance

1. Low R&D expense, depreciation and interest expense

2. Net Income/ Revenue ≈  10- 20%

3. Healthy cash level

4. Increasing retained earnings

Qualitative Factors

1. Durable competitive advantage.

If there is no comparative advantage, then choose firms with government intervention that favors the incumbents

2. Geographical diversification

3. Easy to understand business models

When to SELL

1. Loss of Competitive advantage

2. Price/ Earnings per share > 40