Challenger vs M3 Which Is a Better Investment?

Challenger and M3 stocks are two of the most popular options for investors looking to diversify their portfolios. Challenger stocks are known for their high growth potential and willingness to take risks, while M3 stocks are typically more stable and offer consistent returns. Both types of stocks have their own unique benefits and drawbacks, making it crucial for investors to carefully consider their investment goals and risk tolerance before deciding which option is best suited for their individual needs.

Challenger or M3?

When comparing Challenger and M3, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Challenger and M3.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Challenger has a dividend yield of 4.38%, while M3 has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Challenger reports a 5-year dividend growth of -7.53% year and a payout ratio of 114.83%. On the other hand, M3 reports a 5-year dividend growth of 0.00% year and a payout ratio of 2.01%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Challenger P/E ratio at 31.78 and M3's P/E ratio at 10.85. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Challenger P/B ratio is 1.07 while M3's P/B ratio is 1.33.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Challenger has seen a 5-year revenue growth of -0.22%, while M3's is 1.33%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Challenger's ROE at 3.34% and M3's ROE at 12.79%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are A$6.00 for Challenger and $4.58 for M3. Over the past year, Challenger's prices ranged from A$5.85 to A$7.57, with a yearly change of 29.40%. M3's prices fluctuated between $3.79 and $8.78, with a yearly change of 131.66%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.