Skip to main content
Log In
Alger
  • About Alger
    • Our History
      Our Philosophy
      Our Research Process
      Careers
      Investment Team
      Charitable Giving
      We Remember
      Weatherbie Capital, LLC
      Commitment to Sustainability
  • Strategies
    • Strategies Overview
      Asset Classes
      Vehicles
      Strategy Finder
      Alger's Approach to ESG Investing and Oversight
      Large Cap
      Mid Cap
      Small/SMid Cap
      International
      Alternatives
      Specialty
      Focus
      Mutual Funds
      ETFs
      SMAs
      Institutional Separate Accounts
      UCITS
      Collective Investment Trusts
  • Insights
    • Insights
      Blogs
      Alger On the Money
      Alger On the Record
      Manager Commentary
      Capital Markets Outlook
      Retirement Solutions
      Viewpoints
      The Power of Focus
      Perspectives on Growth & Change
      Market Strategy Insights
      Insights on Emerging Markets
  • News
  • Contact Us
    • Contact Us
      Financial Advisors
      For financial advisors, national accounts, retirement and specialty distribution investors.
      Institutional Investors
      For institutional investors, consultants, and sub-advisory relationships.
      Non–U.S. Investors
      For institutional and retail investors outside the U.S.
      General
      For Individual Investors, press inquiries, and general information.
      Family Offices
      For single and multi-family offices
AlgerOn theMoney
.st0 { fill: #999999; } Explore Insights .st0 { fill: #999999; } Subscribe to Emails .st0 { fill: #999999; } .st0 { fill: #999999; } Download PDF

Fastest Growers, Largest Discounts​

Rising interest rates and other factors have driven a strong rotation out of fast-growing equities into slower growth companies with more current cash flows. Has the market gone too far?

Rising interest rates and other factors have driven a strong rotation out of fast-growing equities into slower growth companies with more current cash flows. Has the market gone too far?

​Illustration chart showing Fastest growers, relative price-to-sales ratios from 1960 to late-May 2022. Source: Empirical Research Partners. Data is as of May 2022.
  • Valuations of the fastest-growing decile of stocks soared during the pandemic when new lifestyles and shopping habits accelerated the economy’s digital transformation.

  • ​​More recently, valuations of the fastest-growing stocks have been falling dramatically, in our view, first driven by expectations of the pandemic slowing and the economy reopening and then driven by rising interest rates to combat stubbornly high inflation. We believe small companies, which in many cases haven’t achieved profitability but have strong growth potential, have been the epicenter of this trade (see AOM 253​).​​

  • As shown above, however, investors’ preference for current cash flows has created considerable discounts in a surprising place—the fastest growing large cap growth stocks, which now have historically low relative valuations in decades, potentially providing another attractive opportunity for patient long-term oriented investors.

​

Recommended Insights for You:

​​
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of June 2022. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a ​recommendation to purchase or sell securities.

​​ Risk Disclosure: Investing in the stock market involves certain risks, including the potential loss of principal.​ Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness such as COVID-19 or other public health issues, recessions, or other events could have a significant impact on investments.

​ Important Information for US Investors: This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund and ETF shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds ​

Important Information for UK and EU Investors: This material is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations). It is for information purposes only and has been prepared and is made available for the benefit investors. This material does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorised or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this material and should be satisfied in doing so that there is no breach of local legislation or regulation. ​

​Certain products may be subject to restrictions with regard to certain persons or in certain countries under national regulations applicable to such persons or countries.

​Alger Management, Ltd. (company house number 8634056, domiciled at 78 Brook Street, London W1K 5EF, UK) is authorised and regulated by the Financial Conduct Authority, for the distribution of regulated financial products and services. FAM and/or Weatherbie Capital, LLC, U.S. registered investment advisors, serve as sub-portfolio manager to financial products distributed by Alger Management, Ltd.

Alger Group Holdings, LLC (parent company of FAM and Alger Management, Ltd.), FAM, and Fred Alger & Company, LLC are not authorized persons for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”) and this material has not been approved by an authorized person for the purposes of Section 21(2)(b) of the FSMA.
​
Important information for Investors in Israel: This material is provided in Israel only to investors of the type listed in the first schedule of the Securities Law, 1968 (the “Securities Law”) and the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995. The Fund units will not be sold to investors who are not of the type listed in the first schedule of the Securities Law.

​ Fred Alger & Company, LLC 100 Pearl Street, New York, NY 10004 / www.alger.com
​ 800.305.8547 (Retail) / 800.223.3810 (Institutional)​

​

 RecommendedContent Title

ETF Investors

This ETF is different from traditional ETFs.

Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. Specifically:

You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information.

The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders.

These additional risks may be even greater in bad or uncertain market conditions.

The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF confidential, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information regarding the unique attributes and risks of this ETF, please refer to the prospectus.
PRI Signatory to the PRI and carbon neutral.

ABOUT ALGER

  • Our History
  • Our Philosophy
  • Our Research Process
  • Investment Team
  • Weatherbie Capital, LLC
  • Charitable Giving
  • We Remember
  • Think Further
  • Documents & Forms
  • Fund Literature
  • Careers
  • FAQs

ESG

  • Commitment to Sustainability
  • Alger's Approach to ESG Investing and Oversight

STRATEGIES

  • ASSET CLASSES
    • Large Cap
    • Mid Cap
    • Small/SMid Cap
    • International
    • Alternatives
    • Specialty
    • Focus
  • STRATEGY FINDER
    • Mutual Funds
    • ETFs
    • SMAs
    • Institutional Separate Accounts
    • UCITS
    • Collective Investment Trusts

TOOLS

  • 10 Year Estimator
  • Quarterly Expense Estimator

INSIGHTS

  • Featured Insights
  • Capital Markets Outlook
  • Alger On the Money
  • Alger On the Record
  • The Alger Podcast
  • Think Further for Retirement
  • Search All Insights

LITERATURE

  • Mutual Funds
  • SMAs
  • Institutional Separate Accounts
  • UCITS

NEWS

  • Press Releases
  • Notices

PRICES

  • Mutual Funds
  • UCITS

CONTACT US

  • Financial Advisors
  • Institutional Investors
  • Non-U.S. Investors
  • General Information

LEGAL NOTICES

  • Proxy Information
  • 2021 Dividends & Distribution Information
  • Sales Charges
  • Customer Relationship Summaries
  • 2021 Tax Information
  • UK Investor Report
  • Form ADVs
View Mobile Site

Copyright Alger All Rights Reserved Privacy Policy Business Continuity Terms and Conditions
youtube channel twitter LinkedIn Instagram