• Home
  • Sustainable Investment Week
    • ESG
    • Sustainable Investment
    • Sustainable Investing
  • Equities
    • UK
    • Global
    • Europe
    • US
    • Asia
    • Emerging markets
    • Specialist
  • Bonds
  • Multi-asset
  • Funds
    • Unit trusts/OEICs
    • Investment Trusts
    • VCTs/EIS
    • Platforms
    • ETFs
    • Pensions
  • Regulation
  • Diversity
  • People moves
  • Events
  • Financial library
  • Industry blogs
  • Digital Edition
  • Newsletters
  • Sign in
    • logged-in-corporate-menuYou are currently accessing Investment Week via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0) 1858 438800

      Email: [email protected]

      • Sign in
     
      • Account details
      • Newsletters
      • Contact support
      • Sign out
     
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
    • Facebook
    • YouTube
    • Instagram
  • Register
  • Events
    • Upcoming events
      event logo
      Professional Adviser Working Lunches 2021

      A series of invitation only "meet the manager" virtual lunches to discuss how a multi-asset strategy can benefit your clients and your business.

      • Date: 14 Apr 2021
      • ONLINE, ONLINE
      event logo
      Global Equities Market Briefing

      Investment Week are delighted to announce the date of the Global Equities Market Briefing. Against an uncertain backdrop for investors as the world continues to fight the Covid-19 pandemic, this interactive half-day event offers a valuable opportunity for delegates to hear the views of a number of different global equity managers and fund groups in one place. 

      • Date: 23 Apr 2021
      • Online, Online
      event logo
      Professional Adviser ESG Masterclass 2021

      Professional Adviser is excited to launch the new ESG Masterclass, taking place live online from 28th - 29th April 2021. Delegates attending this event will benefit from thought-provoking presentations, informative Q&A sessions and structured CPD hours.

      • Date: 28 Apr 2021
      • Live Online, Live Online
      event logo
      Fund Selector Briefing: Dublin 2021

      Investment Week's Fund Selector Briefing: Dublin 2021 is taking place live online on 29th February from 09:00 - 11:45. Aimed at senior investment professionals involved in the fund selection process, this event will provide the opportunity to hear from, and question, fund managers and networking with your peers.

      • Date: 29 Apr 2021
      • ONLINE, ONLINE
      View all events
      Follow our events

      Sign up to receive email alerts about our events

      Sign up

  • White papers
    • Fidelity logo whitebackground1200 630px 1 120x194
      The ETF Evolution

      In this exclusive magazine exploring the evolution of quality and income ETF strategies, King reveals that each ETF follows an investment strategy developed by the group's in-house research team that leverages fundamental active insights to inform the factor definitions and applies portfolio construction principles to mitigate the unintended biases.

      Download
      7ded04ac5957a69da8d1df41c8f21a0c33988d8f 1 120x194
      A bet on the UK bounce back

      David Cumming, Aviva Investors' chief investment officer for equities, last year witnessed turbulent times for UK equities but he remains positive about the market in which he has a personal as well as a professional stake.

      Download
      Find white papers
      Search by title or subject area
      View all white papers
  • Industry blogs
  • Digital Edition
Investment Week
Investment Week
Sponsored by BMO
  • Home
  • Sustainable Investment Week
  • Equities
  • Bonds
  • Multi-asset
  • Funds
  • Regulation
  • Diversity
  • People moves
  • logged-in-corporate-menuYou are currently accessing Investment Week via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0) 1858 438800

    Email: [email protected]

    • Sign in
 
    • Account details
    • Newsletters
    • Contact support
    • Sign out
 
  • Trending
  • IW 12 Apr issue
  • Past IW issues
  • Barnett joins Tellworth
  • Modern slavery
  • Canada
  • IMAIAs
  • Partner Insight

How we evaluate growth stocks - LGIM's Launder

  • Gavin Launder, Lead Fund Manager of the Legal & General Growth Trust
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Share on Whatsapp
  • Send to  
0 Comments

Partner Insight: Gavin Launder, Lead Fund Manager of the Legal & General Growth Trust, on the four characteristics of a growth stock and how he identifies a mispriced equity

When seeking out the best growth companies from the UK universe, the Growth Trust team look for four common themes; the first being a disruptive quality, explains Gavin Launder.

"As a ‘disrupter' they will be a new entrant into the sector. They'll be doing something differently," he says.

A second growth characteristic, he continues, are companies who are market leaders in the space they've created. Another is scale-up potential. When a company is constantly improving its product offering and its marketing effort, it makes it really difficult for new market entrants to compete because you need to offer all of what they offer, and more.

"A final characteristic or ‘growth theme' is that we look for companies with extremely high margins and this is shown by gross margins. So although the company's operating margins may be lower because they're spending a lot on marketing and advertising to roll out the product and get new customers in, the core product itself is extremely profitable. That is something that makes their business model highly viable and highly profitable."

Looking ahead

If this is the process for identifying good growth opportunities, what signals are there that a company is overpriced?

"An indication of a mispriced company is when the market doesn't look far enough out when evaluating growth stocks. Typically analysts look to three years only. That then makes the near-term valuations appear to be expensive. But if that fade doesn't happen, if the company beats the fade, by even a couple of years really, that changes the valuation significantly.

"The example I would give is ASOS. They are growing at 30% top line in their 18th year of existence. Can they maintain good double digit growth? Maybe not but 20-something-% for the next 15 years is plausible. Yet the market has them fading after two or three years. So we do a lot of work around the longer term, and the sustainability of growth in these companies."

Ultimately, Launder adds, the further out you start looking into a company's future, the more likely you will move from being fairly objective to fairly subjective. So you do need to immerse yourself in the company, get to know the management, and get to know the competitors. "That's something we always stay on top of."

 

Click here to learn more about how LGIM invests in their best ideas, without sector or stock constraints

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Share on Whatsapp
  • Send to  
  • Topics
  • Partner Insight
  • Emerging markets
  • LGIM
  • Industry Voice
  • legal and general investment management
blog comments powered by Disqus
Back to Top
Trustpilot

 

  • Contact us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters
  • Facebook
  • YouTube
  • Instagram

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading