Growth Investor Today 26 June 2024

Growth investing, a strategy that can significantly increase an investor’s capital, particularly appeals to those seeking undervalued companies with robust financial performance and a commitment to returning capital to shareholders. This strategy, with its key indicators such as Price Book Value Ratio (PBV) less than or equal to 1.5, Return on Equity (ROE) greater than 15%, Net Profit Margin (NPM) greater than or equal to 15%, Dividend Yield greater than 2% and Market Capitalization greater than IDR 5 Trillion, holds the promise of high returns for potential investors.

As of June 26, 2024, based on the five indicators for growth stocks, these are firms that can be categorized as growth stocks: United Tractors Tbk, PT Trimegah Bangun Persada Tbk, Adaro Energy Indonesia Tbk, Paramita Bangun Sarana Tbk dan Sigma Energy Compressindo Tbk. For United Tractors Tbk, the PBV is 0.98, ROE is 21.34%, NPM is 15.26%, and Dividend Yield is 10.5%. The PBV of 0.98 suggests that the market values the company slightly below its book value, which can indicate undervaluation or potential issues investors perceive. A high ROE of 21.34% suggests that United Tractors effectively generates profit from shareholders’ equity, showcasing solid financial performance. An NPM of 15.26% is healthy, showing that the company retains a significant portion of its revenue as profit after all expenses. A high % dividend yield of 10.5% suggests that the company is returning a substantial portion of its earnings to shareholders, making it attractive for income-focused investors. Thus, United Tractors Tbk is a strong performer, generating efficient profit and shareholder returns. The relatively low PBV might indicate undervaluation, making it a potentially attractive investment. For PT Trimegah Bangun Persada Tbk, the ROE is 16.1%, NPM is 49% and Dividend Yield is 2.22%. An ROE of 16.1% is solid, indicating effective utilization of shareholders’ equity to generate profit. A very high NPM of 49% shows exceptional profitability, meaning the company retains almost half of its revenue as net profit. A lower % dividend yield of 2.22% suggests that the company maintains more earnings for growth or other investments rather than distributing it to shareholders. Thus, PT Trimegah Bangun Persada shows excellent profitability and decent ROE but has a relatively low dividend yield, indicating a focus on reinvestment over immediate shareholder returns. For Adaro Energy Indonesia Tbk, the PBV is 0.74, the ROE is 21.01%, the NPM is 24.91%, and the Dividend Yield is 15.1%. A PBV of 0.74 suggests significant undervaluation, as the market price is well below the company’s book value. A high ROE of 21.01% signifies solid financial performance and efficient profit generation from equity. A healthy NPM of 24.91% shows good profitability, with a substantial portion of revenue converted into net profit. A very % dividend yield of 15.1% indicates significant returns to shareholders, making it highly attractive for income investors. Thus, Adaro Energy Indonesia Tbk exhibits solid financial performance with high ROE and NPM, significant undervaluation, and attractive dividends, making it appealing to investors. For Paramita Banung Sarana Tbk, PBV is 1.41; ROE is 17.2%, NPM is 18.27%, and Dividend Yield is 32.07. A PBV of 1.41 indicates that the company is valued above its book value, which can reflect positive market perceptions or growth potential. An ROE of 17.2% indicates good performance in generating profit from equity. A solid NPM of 18.27% reflects good profitability. An extremely high dividend yield of 32.07% is scarce, suggesting that the company is returning a massive portion of its earnings to shareholders. Thus, Paramita Bangun Sarana Tbk shows strong profitability and high shareholder returns, though the highly high dividend yield warrants scrutiny of its sustainability and potential impacts on future growth. For Sigma Energy Compressindo Tbk, PBV is 1.12; ROE is 16.8%, NPM is 30.1%, and Dividend Yield is 4.55. A PBV of 1.12 indicates a slight premium over book value, suggesting a fair market valuation or positive growth expectations. An ROE of 16.8% indicates good efficiency in generating returns from equity. A high NPM of 30.1% shows strong profitability and efficiency in converting revenue into net profit. A dividend yield of 4.55% is decent, providing a reasonable income stream to shareholders. Thus, Sigma Energy Compressindo Tbk demonstrates strong profitability and good returns on equity, with a reasonable dividend yield suggesting a balanced approach between reinvestment and shareholder returns.

In conclusion, United Tractors Tbk and Adaro Energy Indonesia Tbk show solid financial performance with high ROE and attractive dividend yields, but their low PBV indicates potential undervaluation. PT Trimegah Bangun Persada Tbk Exhibits excellent profitability but focuses less on dividends, possibly indicating reinvestment strategies. While Paramita Bangun Sarana Tbk shows strong profitability and exceptionally high dividends, such high payouts should be carefully assessed. Sigma Energy Compressindo Tbk balances good profitability with reasonable dividend yields, reflecting a stable and fair market valuation. Investors should consider these factors, the overall market conditions, industry trends, and company-specific developments when making investment decisions.