Your investing decisions make you cautious and others curious at the same time. Why cautious because you have to be very careful before pouring in your money and others will go curious about how you’re achieving good returns as result. It’s essential to counter some knowledge before taking any step ahead. Investors like you have different styles of investing, some like to play intraday, some are into SIPs, some are long-term investors, and more. Your potential to invest in the stock market requires a plan including the capacity to take risks, the tenure of your investment and things like this. Various types of stocks offer returns in a discrete way depending upon their nature, market cap, size of the company, background of the company, the products it deals in, etc. In this article, we’ll discuss the concept of growth stocks vs value stocks, their meaning, how they work, and investing guide about them.

1. Growth Stocks
vs
Value stocks

2. Introduction – Growth Stocks
vs Value Stocks
Your investing decisions make you cautious and others
curious at the same time. Why cautious because you have
to be very careful before pouring in your money and
others will go curious about how you’re achieving good
returns as result. It’s essential to counter some knowledge
before taking any step ahead. Investors like you have
different styles of investing, some like to play intraday,
some are into SIPs, some are long-term investors, and
more. Your potential to invest in the stock market
requires a plan including the capacity to take risks, the
tenure of your investment and things like this.
Various types of stocks offer returns in a discrete way
depending upon their nature, market cap, size of the
company, background of the company, the products it
deals in, etc. In this article, we’ll discuss the concept of
growth stocks vs value stocks, their meaning, how they
work, and investing guide about them. Let’s begin with
Growth Stocks.

3. Growth Stocks
The stocks whose profits will keep on growing in the
coming times are referred to as the growth stocks.
Growth stocks generally have the potential to leverage
their returns for a period of time. The reason for such
growth either lies in the company’s products and/or
services or the company’s potential to beat its
competitors and able to deliver extraordinary
performance against its competitors’ business. Investing
in growth stocks is totally a choice of the investors &
traders and these can be any type of company say, small-
cap, mid-cap or large-cap.
It is also said that the growth stock companies are
generally the not-so-established ones and mostly look for
expansion rather than distributing dividends to their
stakeholders. This is because their idea is to cater for the
maximum market and make space for themselves. The
best 3 growth stock companies in India in 2022 are-
Bajaj Finance (CMP- ₹7076.60, 28th July 2022)
Britannia Industries (CMP- ₹3,869.35, 28th July 2022)
Muthoot Finance (CMP- ₹1,063.90, 28th July 2022)

4. Growth Stocks Vs
Value Stocks
A quick view at the major point of
differentiation in both types of
stocks. Here it is-
Category Growth stock Value stocks
Price Currently overvalued. Currently undervalued.
PE ratio Above-average PE ratios. Low PE ratios
Dividends Low or no dividend yields High dividend yields.
Risk High volatility. May not increase as expected.

5. Mechanism of Growth
Stocks Vs Value Stocks –
The concept behind the difference between growth and
value equities is straightforward. Value completely
outweighs development. Investors are responsible for
determining their goals for goals-based investing and
selecting growth or value companies accordingly.
Growth companies have the potential to increase in
value significantly but are noticeably more volatile than
value stocks. Value stocks, on the other hand, are low-
risk and provide consistent dividends, but they are
unable to meet short-term investing objectives.
Investing in growth stocks for the short-term and value
stocks for the long-term is the USP of growth and value
stocks respectively. Investors prefer to keep value
stocks for the long term since they provide them with
consistent returns and share price growth. You can
invest in growth stocks for the short term and sell all of
your holdings or book profits to meet your expectations
because growth stocks typically don’t pay dividends but
appreciate by a significant margin.

6. Experts agree that diversifying among growth
and value stock companies is the best
strategy to play with. You can divide your
funds and designate a portion for growth
stock investments and the remaining half for
value stock investments. By doing this, you
may make sure that you can meet both your
short-term and long-term financial objectives.

7. Which is Better To Invest? –
Growth Stocks vs Value Stocks?
To make the choices between the two, here are
some points to consider regarding which way to go.
Current Income in your Portfolio
As far as the current income is concerned, you
can’t expect a growth stock to give you that as
the profit of these companies is preferred to
pour in the faster growth and expansion to
garner the market better. Vice-a-verse with the
value stock, you can expect a current income in
the form of dividends from the profit potential
of the company.

8. Stock Price Movement
As the price of the value stock of the company will
remain stable and give returns over a period of
time but when it comes to the growth of
company stock, then the stock price movement
cannot be traced and with the boom or boon
move, the price of the stock can fluctuate.
Investments to Payoff
If you want it real quick, then invest in those value
stocks which you think will be appreciated in the
least time. Otherwise, the growth stock
investments take time to flourish the benefits.
Sometimes, you believe in a growth company
stock but it will give returns in the longer run.

9. Tracking Indexes
Trace the S&P 500 Growth Index & S&P 500
indexes to help you determine the next best
growth vs. value stock to put your money in. The
S&P Growth index chooses the stocks with the
strongest price momentum and the best three-year
growth in profits per share and revenue among its
top 500 growth stocks whereas the S&P Value
index chooses the stocks based on their valuation
metrics.
Something that you should know!
The S&P 500 is not just a combination of growth &
value stocks but has a level of bifurcation in both of
them. So, the growth sector has mainly two sectors
namely technology & consumer discretionary which is
40% in total of the S&P 500 index. On the other hand,
the sectors like finance, energy, consumer staples,
and industry related make up approximately 29% of
such index.

10. Let’s Wrap
Investing in any of the stocks can be the best or
worst decision for the trader but what is important
is your basis for taking such decisions. Again, your
risk tolerance, your investment amount, and your
duration of investment per se are the factors that
should be considered before making any investing
plan.
In the pointers mentioned in the column above,
you are now well-equipped with how growth
stocks vs value stocks work and how they
gain/lose momentum in the market. None of your
decision will be wrong but what is crucial is that
you’ll learn all the aspects of the concerned stock
and the company whether growth or value and
then you get your money in that.