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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 MatchesMargin account (stocks)Margin account (stocks)A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers. Undated stocksUndated stocksFixed interest stocks which have no redemption date. Old economy stocksOld economy stocksStocks in sectors unrelated to telecommunications, the internet, software or any other technology-driven industry. 'New economy' stocks are seen as offering the most potential for capital growth. Growth 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. Further Suggestionsstepped interest debenture stocksBlue chip stocks defensive stocks Screen stocks Small capitalization (small cap) stocks Countercyclical stocks bearer stocks/shares |
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