A Comparative Study Of High-Valuation,High-Growth And Low-Valuation,Low-Growth Stock Returns

Securities investment is the activity of discovering and trading stocks that deviate from intrinsic value in the stock market to obtain investment income.Stock investment activities,like any other investment activity,expect to achieve the goal of maximizing profits while balancing the costs and benefits of the investment.The higher the priceto-earnings ratio of stocks,the longer the investment period is needed to recover the cost of buying stocks,and the higher the stock's growth,the more investors can get higher in less time.Low-value and low-growth companies are often mature companies with stable development and long-term returns.High valuations corresponding to high growth may overdraw their future growth,and the undervaluation of mature companies may be a potential opportunity for cost-effectiveness.Based on the actual problems in stock investment,this paper focuses on the combination of high valuation-high growth and low valuation-low growth stocks.The combination of price and growth factors is used to analyze the performance of valuation and growth factors,which is a practical investment decision based on China's A-share market.Common stocks that perform well and appear to have greater growth potential will also be subject to higher pricing.Even if the investor's judgment on the prospect of this type of stock is correct,based on the strong effective market theory,it is still possible to obtain a better return on investment,because the investment income has been completely included in the stock price paid by the investor.And even pay the stock price that exceeds the expected return.On the other hand,investors' judgments on the future development of listed companies may be wrong.The current high-growth companies are unlikely to maintain a high-speed growth trend in the future,leading to instability in judgment.Conversely,the market will also underestimate companies with uncertain growth or poor performance in the future.On the other hand,it is possible that compared with other companies,although profits have improved,they have long been ignored by the market.The company's future profits and stock prices will rise accordingly,and will also bring considerable returns to investors.Summarizing the research results of scholars before,this paper proposes to use the growth factor of the total asset growth rate,net profit growth rate and operating income growth rate to analyze the growth of sample stocks by factor analysis and test,and the price-earnings ratio indicator As a criterion for judging the company's valuation.Based on the comprehensive ranking of these two indicators,using the combined spread method analysis,high-value and high-growth stocks can achieve higher excess returns than low-valued and low-growth stock portfolios.The research shows that among all the stocks ranked by P/E ratio and growth level,high-valued and high-growth stocks can obtain the highest and relatively stable excess return,while the excess return of low-valued and low-growth stocks is much smaller than that of high-valued and high-growth stocks.With the shortening of the formation period,the yield of high-valuation and high-growth stocks increases significantly.This shows that under the investment environment set in this paper,the optimal investment strategy is to hold high-valuation and high-growth stocks in the short term to obtain the maximum excess return.