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Value stocks |
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Value stocksStocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or P/E ratios) in a variety of countries.Value stocks Similar MatchesGrowth stocksGrowth stocksStocks whose earnings have grown at an above average rate over a number of years and which are expected to continue to grow at a high rate for some time to come.Growth stocks usually trade on higher P/E ratios than non growth stocks, but their share prices also tend to be more volatile, which means they are inherently more risky than other stocks. If their growth falters, the market may punish them by marking down the share price severely.Because their primary attraction is capital growth, growth stock companies are often not expected to pay dividends. The reasoning is that the shareholders are better served by the money being invested back into the company. This is fine if the company delivers on its growth promises, as increases in earnings will, if the P/E stays the same, result in higher share prices. But if the company fails to deliver on its promises, investors will not only miss out on the capital appreciation they expect, but won't even have dividend income to compensate. Penny stocksPenny stocksIn the US, stocks which normally sell for $1 or less and traded in the over the counter market. They are highly speculative since a relatively small increase or decrease in price can result in significant gains or losses. Undated stocksUndated stocksFixed interest stocks which have no redemption date. Screen stocksScreen stocksTo analyze various stocks in search of stocks that meet predetermined criteria. For example, a simple value screen would sort all stocks by their price-to-book ratio and pick the stocks with the lowest ratios as candidates for the value portfolio. Small capitalization (small cap) stocksSmall capitalization (small cap) stocksThe stocks of companies whose market value is less than $1 billion. Small-cap companies tend to grow faster than large-cap companies and typically use any stocks for expansion rather to pay dividends. They also are more volatile than large-cap companies, and have a higher failure rate. Further Suggestionsbearer stocks/sharesdefensive stocks Margin account (stocks) old economy stocks Countercyclical stocks stepped interest debenture stocks Blue chip stocks |
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