When looking at all stocks over a period of time, even the best quality ones, it becomes clear that companies often fall into or out of favour with investors based on short-term factors. These short-term factors can greatly impact the perception and the PE rating of the company’s stock price and will often impact investors’ perception as to what constitutes a company with bright prospects (a ‘growth’ stock) as opposed to a company with poorer prospects. 

Further to IML’s recent Investment Insights ‘Market dynamics – the case for value remains’, Daniel Moore, IML Portfolio Manager, compares two ASX top 100 stocks – A2 Milk (market cap $8 billion) which falls firmly into the ‘growth’ stock category and Brambles (market cap $14 billion), which is perceived by many in the market as having earnings issues and is thus seen as a much less exciting prospect, thereby now very much falling into the ‘value’ category.