GEM vs Premium Brands

When investing in stocks, many investors are faced with the decision of whether to invest in Growth Enterprise Market (GEM) stocks or Premium Brands stocks. GEM stocks are typically smaller, high-growth companies with the potential for significant upside but also higher volatility. On the other hand, Premium Brands stocks are well-established, stable companies with a track record of consistent performance and steady dividends. Both options have their own set of risks and rewards, and it is important for investors to carefully consider their investment goals and risk tolerance before making a decision.

GEM or Premium Brands?

When comparing GEM and Premium Brands, 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 GEM and Premium Brands.

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. GEM has a dividend yield of 1.22%, while Premium Brands has a dividend yield of 3.52%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. GEM reports a 5-year dividend growth of 13.97% year and a payout ratio of 113.65%. On the other hand, Premium Brands reports a 5-year dividend growth of 10.14% year and a payout ratio of 124.47%.

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 GEM P/E ratio at 27.36 and Premium Brands's P/E ratio at 37.03. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. GEM P/B ratio is 1.72 while Premium Brands's P/B ratio is 2.39.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, GEM has seen a 5-year revenue growth of 0.66%, while Premium Brands's is 0.51%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with GEM's ROE at 6.42% and Premium Brands's ROE at 6.42%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥6.46 for GEM and C$93.05 for Premium Brands. Over the past year, GEM's prices ranged from ¥3.95 to ¥7.84, with a yearly change of 98.48%. Premium Brands's prices fluctuated between C$84.66 and C$97.28, with a yearly change of 14.91%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.