Is growth the new margin of safety?


Ratings and price correct at time of issue

Company Rating Date Previous Rating Date Closing Price
ARYZTA NEUTRAL 03/06/15 Outperform 14/06/10 68.5c
Associated British Foods OUTPERFORM 05/07/11 Neutral 03/11/10 2305p
C&C OUTPERFORM 30/06/09 N/A N/A 409c
Corbion NEUTRAL 29/04/11 Outperform 01/09/10 2574c
Cranswick plc OUTPERFORM 09/11/16 N/A N/A 2620p
Danone OUTPERFORM 18/06/19 Neutral 09/02/17 7786c
Donegal Investment Group OUTPERFORM 17/09/10 Underperform 30/06/09 1110c
DSM OUTPERFORM 11/02/15 Neutral 16/07/14 11060c
Givaudan NEUTRAL 21/06/12 N/A N/A 260900chf
Glanbia OUTPERFORM 30/06/09 N/A N/A 1153c
Greencore Group NEUTRAL 13/03/18 Outperform 20/06/13 206p
Kerry Group OUTPERFORM 30/06/09 N/A N/A 10820c
Norish OUTPERFORM 04/05/18 N/A N/A 59.0p
Origin Enterprises OUTPERFORM 30/06/09 N/A N/A 475c
Premier Foods NEUTRAL 12/10/16 Outperform 12/11/15 31.9p
Symrise NEUTRAL 15/01/19 Outperform 21/06/12 8318c
Südzucker NEUTRAL 10/10/17 Outperform 03/06/15 1475c
Tate & Lyle NEUTRAL 17/02/16 Underperform 13/02/14 732p
Total Produce OUTPERFORM 14/05/10 Neutral 30/06/09 138c


Against a backdrop of accommodative monetary policy, the importance of growth to valuation has risen exponentially. The classic barometer for ‘margin of safety’ has also shifted – from absolute valuation to relative growth. With sustainable growth in short supply, investors are sacrificing ROIC in favour of accessing growth models. Across our value coverage, earnings concerns are being more heavily penalised, with investors selling both the rumour and the facts. The market’s disregard for valuation has wrong-footed investors and may ultimately leave the task and opportunity for price discovery to non-market participants.

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Aug 14 2019, 07:05 IST/BST