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Value vs. Growth Investing

Value vs. Growth Investing

May 09, 2022

IntentGen is proud to serve as your go-to destination for your investing and financing needs. In our newest guide, we're answering two top questions: what is value investing and what is growth investing. Learn the definitions of both and how these compare in our guide below. Feel free to contact us if you have any additional questions.

What is Growth Investing?

Growth stocks represent companies that demonstrated better-than-average gains in earnings during recent years. While they're expected to keep delivering these high levels of profit growth, there are no guarantees. Growth investing gets its terms because these are "emerging" companies that have the potential to earn high earnings growth but haven't established a long history of earnings growth.

Top characteristics of growth investing include:

  • Higher priced than the general market — Investors will pay high price-to-earnings multiples and will sell them at even higher prices as the companies keep growing.
  • More volatile than the general market — The risk of buying is known that the price can fall due to any negative news about the company. 
  • Strong earnings — No matter the economic conditions, growth companies can continue to achieve high earnings. 

What is Value Investing?

Value funds managers want companies that may not be favorable but still have strong fundamentals. These groups sometimes include stocks of new companies not recognized by investors.

Top characteristics of value investing include:

  • Lower priced than the general market — The point of value investing is stocks of good companies bouncing back once the true value is recognized by other investors.
  • Lower risk than the general market — It can take time to turn out, but value stocks are often more suited to longer-term investors and often carry more risk of price fluctuation than growth stocks.
  • Priced lower than similar companies in the industry — It's believed that most value stocks are created because investors are overreacting to recent company problems like legal problems or negative publicity. This raises doubts about the company's long-term prospects. 

Learn More About Value vs. Growth Investing Today!

Want more details about value or growth investing? IntentGen has the resources and articles to provide you with the necessary information about investment, estate, insurance, and more. Don't hesitate to contact us if you have any questions.