Companies driving innovation may be a good source of long-term growth for investors. Their impact on structural change is reflected in their revenue growth metrics, a primary indicator of value creation.
The internet technology and e-commerce companies in the OGIG Index portfolio have experienced accelerating revenue growth.
Revenue growth may be the best indicator of a company’s ability to create value for investors. It should come as no surprise that stock price is inextricably linked to sales growth. Faster growing companies should outperform slower growing companies, all things equal. What may come as a surprise is the degree of outperformance generated by the fastest growing companies.
By segmenting global tech stocks in quartiles based on 3-year revenue growth, the impact becomes clear. Global technology stocks in the 1st quartile by revenue growth outperformed those in the 4th quartile by over 40% on average over last 3 years ending 6/30/2021.
OGIG Index: The O’Shares Global Internet Giants Index (Ticker: OGIGX) is a rules-based index intended to give investors a means of tracking stocks exhibiting quality and growth characteristics in the internet technology and e-commerce business segments and pass screens for gross margin and cash burn sustainability.
Nasdaq 100 Index: The NASDAQ-100 is a modified capitalization-weighted index of the 100 largest domestic and most active non-financial domestic and international issues listed on the NASDAQ. No security can have more than a 24% weighting. The index was developed with a base value of 125 as of February 1, 1985. Prior to December 21, 1998 the Nasdaq 100 was a cap-weighted index.
Price/Sales Ratio: The price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues.
S&P Global 1200 Information Technology Index: The S&P Global 1200 Information Technology index consists of all members of the S&P Global 1200 that are classified within the GICS® information technology sector.
Revenue Growth: Trailing 12 months
1st Quartile: Contains the top 25% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth. 2nd Quartile: Contains the top 25%-50% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth.
3rd Quartile: Contains the top 50%-75% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth
4th Quartile: Contains the bottom 25% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth.
Digital transformation of the U.S. economy is accelerating because the pandemic is forcing companies to change, fast. The U.S. economy, we call it “America 2.0”, could get six years of digital transformation packed into six months, with companies adopting technology,...
Summary 20% cheaper based on 3-year average. Time to invest? What happened last time internet stocks were this cheap? 20% Cheaper Based on 3-Year Average. Time to invest? What if someone told you that stocks that have grown revenue by over 40% on average were at their...
The OGIG portfolio has an active share of 76% vs. the Nasdaq 100 and over 90% vs. the Technology Select Sector meaning that it is a highly differentiated approach to growth and tech. Revenue growth is a key driver in the selection and weighting of stocks in OGIG. This...
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