What's the Difference Between a Growth and a Value Stock?
Jun 5th 2012 6:14PM
Updated Jun 5th 2012 6:16PM
The following video is part of our "Ask a Fool" series, in which Motley Fool analyst Austin Smith answers questions across the investing universe.
In today's edition, Austin answers one of the most common questions we get at the Fool: What's the difference between a growth and value stock? Austin identifies value stocks as those which are mispriced, or trading to a discount to their intrinsic value. Value investors are buying companies with the expectation that shares will rise to reflect the real value of the company. Meanwhile, growth stocks are those that investors are buying with the expectation of large earnings in the future. There are a few telltale signs covered in the video to help you identify whether you're looking at one type of stock or another. Austin reminds investors that growth and value strategies aren't mutually exclusive and thinks Warren Buffett said it best when he quipped that "growth and value investing are joined at the hip."
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At the time this article was published Austin Smith owns shares of Berkshire Hathaway.The Motley Fool owns shares of Netflix, Berkshire Hathaway, Amazon.com, and Intuitive Surgical. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical, Berkshire Hathaway, Amazon.com, and Netflix. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter services free for 30 days.
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