LEC vs REC Which Performs Better?

When it comes to investing in the stock market, two common types of stocks that are often compared are LEC (Large-cap, Established Companies) and REC (Rapidly Growing, Emerging Companies). LEC stocks are typically associated with stability, established track records, and lower risk potential, making them a popular choice for conservative investors. On the other hand, REC stocks offer higher growth potential but also come with greater volatility and risk. Understanding the differences between these two types of stocks can help investors make informed decisions when building their investment portfolios.

LEC or REC?

When comparing LEC and REC, 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 LEC and REC.

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. LEC has a dividend yield of 1.57%, while REC has a dividend yield of 3.05%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. LEC reports a 5-year dividend growth of -15.53% year and a payout ratio of 0.00%. On the other hand, REC reports a 5-year dividend growth of 9.03% year and a payout ratio of 6.65%.

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 LEC P/E ratio at 35.75 and REC's P/E ratio at 9.85. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. LEC P/B ratio is 1.23 while REC's P/B ratio is 2.00.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, LEC has seen a 5-year revenue growth of 0.45%, while REC's is 1.15%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with LEC's ROE at 3.48% and REC's ROE at 21.27%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥1269.00 for LEC and ₹542.50 for REC. Over the past year, LEC's prices ranged from ¥983.00 to ¥1500.00, with a yearly change of 52.59%. REC's prices fluctuated between ₹389.20 and ₹654.00, with a yearly change of 68.04%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.