In any market environment it makes sense to invest in companies that are not over valued and have capacity for earnings growth. Although with the right analysis, in some circumstances paying higher multiples for a stock, can reap benefits.

Andrew Wellington, co-founder and chief investment officer at Lyrical Partners, says while growth is important, if you pay too much for it you will get disappointing returns. And value is important, but if the company does not grow, you probably paid too much for it. Consequently, a successful investment must have both growth and value.

Mr Wellington said: “Today, we are finding this combination of both deep value and growth across a range of sectors and industries.

“There are no broad categories that offer this combination. Rather, value and growth can only be found in individual stocks that have slipped through the cracks and been ignored or misunderstood by the market.

“We find these rare opportunities by being purely bottom-up, sifting through the cheapest stocks in our universe and finding the exceptions that offer quality growth.”

Bill Kanko, founder and president of Black Creek Investment Management, says he is finding opportunities in many areas of the market, including higher growth stocks, where valuations have come down considerably and once again look attractive to long-term investors. These include PayPal Holdings and Kuehne + Nagel International.

Mr Kanko shared: “We had the opportunity to purchase PayPal Holdings at an attractive valuation given that fintech share multiples contracted significantly.

“The company’s growth prospects remain strong given the continued adoption of digital payments, fraud protection, e-wallets, and other services.

“Meanwhile, Swiss global transport and logistics company Kuehne + Nagel International (K + N) presents a strong balance sheet, which will allow it to invest and gain market share. The company’s asset light model provides high returns on its underlying assets.”

Rajiv Jain

Rajiv Jain, chairman and chief investment officer at GQG Partners, says in looking to achieve growth and managing downside risk, essential to compounding wealth, his team has found opportunities in the financials and healthcare sectors.

He said: “Charles Schwab offers wealth management as well as securities brokerage services and is expected to increase its net interest income in a rising rate environment. And Humana is a health insurer where enrolment growth is expected to be driven by the aging demographics in the US.”

Jupiter’s head of strategy for value equities, Ben Whitmore’s investment process looks for lowly valued shares with strong balance sheets and high conversion of profits to cash.

Mr Whitmore said: “Given the sharp fall in many areas there are opportunities spread across many sectors. These include media, IT services, the PC / semi -conductor industry and a wider range of consumer cyclicals (retail for example).

“It is noticeable that there is a particularly high number of potential investments at the moment due to the fear of rising rates, energy prices and a global recession.”

Sunil H Thakor, research analyst and co-portfolio manager at Sands Capital, believes over time that earnings growth tends to drive a businesses’ value ad, so it seeks to own businesses that can sustain above-average earnings growth for a long period of time.

“Secular change is one of the most durable sources of long-duration growth if you can identify businesses well-positioned to benefit from that change,” Mr Thakor says.

So, from a sector (and secular driver) point of view he highlights: financial services digitalization; evolving retail habits (ecommerce, formalization & consolidation, omnichannel), and demand for data access, storage, and processing, and the computing technology those actions require.

Similarly, in looking for growth businesses with the three-to-five-year investment horizon, Rob Rohn, portfolio manager at Sustainable Growth Advisers, says that given the very broad brush that has penalized longer duration growth companies due to the recent increase in interest rates, attractive opportunities are being found in sectors such as health care, technology, consumer discretionary and communications.

Jonathan Mills, co-portfolio manager at Metropolis Capital, outlines a valuation process involving estimating and discounting future cash flows.

Mr Mills noted: “A key part of this analysis is assessing the long term growth that we can expect in future free cash flow.

“It is worth paying a higher multiple for a company with growing cash flow than for one with a steady or declining cash flow. Currently we are seeing interesting opportunities across the growth spectrum.”