Our convictions change over time, thank you to verify that your preferences always match your expectations.

Pins are saved using cookies. Deleting them from your browser will delete your preferences.

delete all my pins

Menu
News 

Alger on the money - You get what you pay for

24 November 2017

Investors generally expect growth stocks to have higher price-to-earnings (P/E) ratios than value stocks but not everyone is aware of the reasons why. To understand this difference in valuation, consider the variables that drive P/E multiples: growth, profitability, and risk. Given how favorably growth stocks rate across these measures compared to value stocks, their higher P/Es may be warranted.

 

  • The Russell 1000 Growth Index has higher expected EPS growth, higher returns on equity, and lower risk in the form of healthier balance sheets compared to the Russell 1000 Value Index.
  • Growth stocks may generate strong returns in the future, if history is any indication (see Alger On the Money “Another Forecast from the Greatest Predictor”), despite their higher valuations relative to the broader market.
  • At Alger, we strive to invest in companies that demonstrate the best growth prospects and we encourage investors to embrace growth as an important component of their portfolios.

 > Download Alger on the Money, A view on the U.S. Market

 

 

La Française Group provides access to the expertise of a number of asset management companies around the world. To provide you with the most relevant information, we have developed an interface to present the full range of products available for your investor profile and country of residence.

Present yourself

1
Country
2
Language
3
Profile

Your country of residence

Your language

Your profile

When navigating on our website, you agree to this policy and consent to our use of cookies in accordance with the terms of this policy. Find out more.