Paramount vs Premium Brands Which Should You Buy?

Investors often face the dilemma of choosing between investing in well-established, blue-chip companies, known as Paramount Brands, or smaller, high-growth companies referred to as Premium Brands. Paramount Brands are typically household names with a long history of stability and consistent dividends, while Premium Brands offer the potential for higher returns but also come with higher risk. Understanding the differences between these two types of stocks is crucial for making informed investment decisions that align with individual risk tolerance and financial goals.

Paramount or Premium Brands?

When comparing Paramount 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 Paramount 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. Paramount has a dividend yield of 2.14%, while Premium Brands has a dividend yield of 4.17%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Paramount reports a 5-year dividend growth of -14.52% year and a payout ratio of -15.70%. On the other hand, Premium Brands reports a 5-year dividend growth of 10.14% year and a payout ratio of 145.77%.

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 Paramount P/E ratio at -4.99 and Premium Brands's P/E ratio at 35.67. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Paramount P/B ratio is 0.34 while Premium Brands's P/B ratio is 2.03.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Paramount has seen a 5-year revenue growth of 0.08%, while Premium Brands's is 0.51%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Paramount's ROE at -6.68% and Premium Brands's ROE at 5.66%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $4.79 for Paramount and C$79.38 for Premium Brands. Over the past year, Paramount's prices ranged from $4.21 to $5.76, with a yearly change of 36.75%. Premium Brands's prices fluctuated between C$75.67 and C$97.28, with a yearly change of 28.56%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.