The Growth Investment Strategy

The growth strategy ranks companies high that have superior growth metrics compared to their peers. Companies are therefore compared to their peers in terms of their growth rates. There are growth companies in every industry, because even if the growth in the industry is low or negative, there are companies that grow more (or shrink less) than their competitors and therefore gain market share.

Investors should choose the growth strategy if they expect the stock markets to rise, as stock with high growth usually achieve higher returns than their competitors in such environments.

Metrics of the growth strategy

Profit growth

Defined as:

\[ \frac{Profit \ (cy) - Profit \ (py) }{\ Revenue \ (py)} \]

For financial companies, we use operating profit as profit metric. For all other companies, we measure profit at EBITDA or EBIT (in case of segment reporting) level.

Shareholder returns

Defined as:

\[ \frac{ Current \ IV + Dividens }{\ Original \ IV \ } \]

This ratio is also referred to as total investor return or total investment return. We use the current investment value at the end of the current period and the original investment value at the end of the previous period.

Revenue growth

Defined as:

\[ \frac{Revenue \ (cy) - Revenue \ (py) }{\ Revenue \ (py)} \]

cy = Current Year
py = Previous Year
IV = Investment Value

The Obermatt investment strategies at a glance