Growth vs Value Stocks
Growth stocks belong to companies growing fast, often at high prices. Value stocks belong to steadier companies that look cheap compared with what they earn.
Growth stocks
These companies grow revenue and profit much faster than average. They usually pay little or no dividend and reinvest everything. Investors accept a high P/E in the hope of big future profits.
Value stocks
These are often mature companies with steady profits, low P/E ratios and regular dividends. The market expects little from them, so the price is low. If things turn out better than feared, the stock can rise.
Which does better?
It changes over time. Growth stocks often lead when interest rates are low, because future profits look more valuable. Value stocks have often done better when rates rise. Many investors hold both.
Not so different
Warren Buffett has said growth and value are joined at the hip. Growth is part of what makes a company valuable. The real question is the price you pay for that growth.
See it in real companies
Open a company to see what it sells and how it makes money.