Given these concerns, for stock investors, focusing on long-term trends may be more important than participating in short-term market movements! Especially in a context where domestic tax cuts could raise U.S. Treasury yields and increased tariffs could fuel inflation, the fundamental health of companies becomes even more critical.

We believe that quality is the foundation for a company's ability to sustain long-term profitability. Therefore, when selecting stocks, in addition to traditional "growth" metrics like earnings growth (EPS), price-to-earnings ratio (P/E), and volatility, it's essential to incorporate "quality" indicators such as return on equity (ROE), debt ratios, and cash flow metrics to evaluate whether a company can balance both "growth" and "quality."

Redefining Growth Stocks with "Quality"

In stock investing, Taiwanese investors have always been enthusiastic about U.S. growth stocks with higher return potential. However, potential returns are merely unrealized "expectations." Whether a company can turn these expectations into actual "profits" depends on whether its financial performance can support its operational goals. Thus, compared to short-term themes, "quality" is the cornerstone of a company's long-term growth.

This isn't just rhetoric—market realities confirm it. Statistics show that stocks combining both "quality" and "growth" tend to deliver better long-term returns than other types of stocks. For example, from 2000 to October 2024, the U.S. Quality Stock Index surged 650%, significantly outperforming the U.S. Growth Stock Index (496%) and the broader U.S. Stock Index (420%) (see chart below). Compared to global stock indices (including emerging markets), its lead was even more pronounced.

Using Key Metrics to Identify Quality Growth Stocks

Given the strong long-term performance of U.S. quality growth stocks, how should we define "quality"? The answer lies in complementing traditional "growth" metrics—such as EPS growth forecasts, forward P/E ratios, and price-to-book ratios (P/B)—with indicators like return on equity (ROE), debt ratios (DBR), interest coverage ratios (ICR), and cash flow accrual ratios (CFAR). These help investors more effectively identify U.S. "quality growth stocks."

U.S. Quality Growth Stocks: Diversified Across Industries

Taking the widely covered information technology sector as an example, Nvidia's P/E ratio of 63x appears less attractive than Synopsys's 61x (see chart below). However, Nvidia's ROE is 91%, and its cash flow-to-total debt ratio is 123%, significantly outperforming Synopsys's 30% and 41%. Thanks to its superior financials, Nvidia's stock surged 239% in 2023, far exceeding Synopsys's 61%.

Beyond the familiar tech sector, "quality growth stocks" also include entertainment/media, healthcare, and consumer discretionary industries. In consumer discretionary, Uber's revenue growth rate of 17% slightly trails Coupang's 18% (see chart below). However, Uber's gross margin is 40%, and its ROE is 23%, surpassing Coupang's 25% and 6%. As a result, Uber's stock gained 149% in 2023, far outpacing Coupang's 10%.

"America First" Faces Tests—You’ll Need High-Quality Stocks

As shown, high-quality growth stocks are not limited to a single sector. Without active professional management, individual investors may struggle to identify such opportunities. More importantly, while Trump champions "America First," whether tariffs on imports and corporate tax cuts can truly revive U.S. manufacturing and broadly benefit U.S. stocks remains uncertain. Thus, finding genuine quality growth stocks is key to successful U.S. stock investing in 2025.

Crucially, widespread corporate tax cuts may boost stock valuations but could also increase U.S. debt burdens, pushing Treasury yields higher and further squeezing corporate profits. Although the Fed cut rates by 50 bps in September and 25 bps in November, whether gradual rate cuts continue in 2025 depends on whether Trump's tax and tariff policies reignite inflation. Therefore, the best strategy now is to invest through U.S. multi-asset funds to navigate potential economic shifts in 2025.

U.S. Multi-Asset: Capturing Quality Growth and Yield

Notably, even as Trump prepares to enter the White House (inauguration on January 20), U.S. Treasury yields have not declined amid the "Trump trade" but have instead gradually risen to 4.4%–4.6% (Source: Bloomberg, 11/13/2024). This reflects market concerns about Trump's dual tax policies (tax cuts + tariffs). Thus, beyond quality growth stocks, investors should also seek additional income sources—whether from high-quality U.S. fixed income or real assets—to pair with growth stocks for continued opportunities in 2025.

The "J.P. Morgan U.S. Leading Harvest Multi-Asset Fund (this fund invests significantly in high-risk non-investment-grade bonds, and dividends may come from capital or equalization reserves)" is a core U.S. multi-asset fund. Its key advantage is flexible allocation adjustments based on market conditions. Beyond U.S. quality growth stocks, it also invests in U.S. investment-grade bonds, high-yield bonds, REITs, and infrastructure equities—making it ideal for investors seeking both quality growth and yield.