Are you looking for the best growth stock? How about something that is intrinsically undervalued based on valuation models? Or are you looking for income and capital returns?
Why not have your cake and eat it too?
In this article I’m taking a look into “perfect” stocks. Those that combine growth, value and dividends/buybacks to provide a return on investment that is unmatched by others. As always this is not financial advice and should not be taken as such. It may help to look more closely at the different aspects that make up these amazing stocks, so let’s do that first.
(G) Growth
What is a growth stock? At the most basic level a growth stock is a stock whose price action will significantly outperform the broader market indices that it belongs. For example, META went up 741% from the bear market lows in 2022 to the peak in 2025, while the broader S&P index went up approximately 76% over the same timeframe. This is significant outperformance and a hallmark of a amazing growth company.
(V) Value
A value company is one that is significantly discounted among it’s peers or the entire market. There are various ways to model a companies value: you could use a sum of discounted cash flows or use their price to earnings ratio to understand the valuation of a company. No matter the method, these value companies standout as those that are trading at a discount to their projected fair value.
(R) Return on invested capital (ROIC)
The third piece of the puzzle, is whether or not the company is returning cash to the investor. The primary ways to do this are dividends and stock repurchases. If a company is doing both of these even better, especially if they are already trading at a discounted value as mentioned above.
Ok, so what companies fit the bill?
Well, not surprisingly, my public portfolio has many of these unicorns. GOOG, META, BABA, and HCC all fit the narrative of a growth, value and ROIC candidates. So let’s look at GOOG to see what an example can be.
GOOG
Alphabet recently announced 1’Q25 earnings, and they were good to say the least. EPS was much higher than expected and revenue and net income both increased from this quarter last year. Overall Alphabet’s revenue and net income have been consistently going up over time, contradicting the narrative of a massive disruption of their search business. Clearly, Alphabet is a strong tech growth play into the future as they are also mitigating the potential search impact with their own LLM Gemini models, now sitting at version 2.5.
What about value? Alphabet has fallen roughly 31.0% from peak to trough in 2025. The average analyst price target for GOOG is over $200 per share and discounted cash flow (DCF) analysis shows price targets even higher than the average analysts estimates.
Returns for investors have also been amazing. Alphabet announced a $70 billion stock buyback as well as raising their quarterly dividend by 5%. Investors are clearly getting a cash return from their investment into GOOG. Most of the free cash flow generated by Alphabet is being returned to the investors in some way and it will be highly accretive over time.
Conclusion
Look for stocks that show high growth, amazing discounts to fair value, and cash returns on investment. Usually investors get excited when one or two of these checkboxes are checked, but in these special companies, you may be able to find the perfect stock with which to crown your investment portfolios.
