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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. Countercyclical stocksCountercyclical stocksStocks whose price tends to rise when the economy is in recession or the market is bearish, and vice versa. Bearer stocks/sharesBearer stocks/sharesStocks or shares which do not record owner's names and for which the companies do not keep a register of ownership. Possession of the certificate is therefore the only proof of ownership. Undated stocksUndated stocksFixed interest stocks which have no redemption date. Further Suggestionsdefensive stocksstepped interest debenture stocks old economy stocks Margin account (stocks) Blue chip stocks Screen stocks Small capitalization (small cap) stocks |
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