How to identify a stock as a growth stock or value stock etc etc..???

Question

I am planning to invest in share market..I ve heard people say about growth stocks..value stocks etc.,But I do not know what it exactly means..From my understanding,A growth stock is a small company which grows at a faster pace then the big company..Is that right?? If so then what is value stock?? and what are the types of stocks are there and how to identify them?? When analazing a company looking at the financial report,I couldnt understand its status..So how to determine a company is doing well by seeing the previous financial report???

Answer 1

A growth stock is one where the Company seems to have strong earnings potential in the future. How the Company is positioned in the market is not necessarily in the Financial Report, but you can check to see if the Company has a history of increasing its dividend.

A Value stock is one where the market seems to have undervalued it. All sorts of "market anomalies" result on Stock Exchanges, especially as the up and down swings are often overdone. If the Company is under new management, for example, that potential may not yet be reflected in its P/E ratio - Price to Earnings - so you can pick up that stock at a low price.

As both of these investment styles rely on what the investor believes will happen in the future, the Report will not neatly say which it is. These are both terms of perception of the future.

Disclaimer:

The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances.  To find and IFA please call 0800 085 3250 or go to http://www.unbiased.co.uk.