The stock market is a huge ocean with unfathomable depths. You need an experienced sailor like Karan Judge to bring you ashore. Only an experienced stock invest dealer would be able to distinguish between a growth stock and a value opportunity. The dividing line is very thin. You should have tremendous knowledge of the functioning of the stock market to understand the terms in the correct perspective.
Of course, big financial institutions have the advantage of availing the services of experts in the field such as Nouam. However, as a normal investor, you should have a fair idea about the terms such as growth stock, value opportunity, and so on.
This article attempts to help you distinguish between a growth stock and a value opportunity. In a strict sense, both are stocks. Both have value when you trade in them. However, there are stark differences as well. In spite of the differences, they do not represent opposite terminologies.
In simple terms, the growth stock is a share in a company that grows at a reasonable rate. As a company grows in size, the earnings of the company increase. This could push the value of the stocks upward. This could make the investors move towards the growth stock as it could offer a higher rate of return than a stagnant stock. Normally, the growth stocks yield a better rate of return than the market does. However, you should know one thing. The growth stocks do not pay dividends. The company usually reinvests the profit into the company rather than sharing it with the investors. This would naturally enable the company to grow.
The growth stick can become a value opportunity if it trades at a reasonable multiple of the earning per share ratio of the company and the book value of the share. There is a difference between the market value and the book value of a share. When a company grows at a fast rate in the market, the market value of the share may go up. However, that does not translate into a value opportunity. You have to consider other factors as well while arriving at the perfect value of the stocks. This would enable you to make a distinction between a buying opportunity and an overvalued stock. An expert like Karan Judge Mumbai would be of great help under the circumstances.
The value stocks trade at a lower price when you compare the same with its peer companies. You value a stock based on the earnings, sale, and the dividends paid by the company. A value opportunity would trade at a price lower than that of its fundamental value. Hence, for an uninitiated investor, this may look like an undervalued share. However, you should understand that the value opportunities are the high dividend yielding shares.
Making the correct distinction is very important. The value stock would have a higher long-term return in comparison with a growth stock. Knowledge of these factors is important for a person wishing to invest in the stock market.
Of course, big financial institutions have the advantage of availing the services of experts in the field such as Nouam. However, as a normal investor, you should have a fair idea about the terms such as growth stock, value opportunity, and so on.
This article attempts to help you distinguish between a growth stock and a value opportunity. In a strict sense, both are stocks. Both have value when you trade in them. However, there are stark differences as well. In spite of the differences, they do not represent opposite terminologies.
In simple terms, the growth stock is a share in a company that grows at a reasonable rate. As a company grows in size, the earnings of the company increase. This could push the value of the stocks upward. This could make the investors move towards the growth stock as it could offer a higher rate of return than a stagnant stock. Normally, the growth stocks yield a better rate of return than the market does. However, you should know one thing. The growth stocks do not pay dividends. The company usually reinvests the profit into the company rather than sharing it with the investors. This would naturally enable the company to grow.
The growth stick can become a value opportunity if it trades at a reasonable multiple of the earning per share ratio of the company and the book value of the share. There is a difference between the market value and the book value of a share. When a company grows at a fast rate in the market, the market value of the share may go up. However, that does not translate into a value opportunity. You have to consider other factors as well while arriving at the perfect value of the stocks. This would enable you to make a distinction between a buying opportunity and an overvalued stock. An expert like Karan Judge Mumbai would be of great help under the circumstances.
The value stocks trade at a lower price when you compare the same with its peer companies. You value a stock based on the earnings, sale, and the dividends paid by the company. A value opportunity would trade at a price lower than that of its fundamental value. Hence, for an uninitiated investor, this may look like an undervalued share. However, you should understand that the value opportunities are the high dividend yielding shares.
Making the correct distinction is very important. The value stock would have a higher long-term return in comparison with a growth stock. Knowledge of these factors is important for a person wishing to invest in the stock market.
