What's the Difference Between a Growth and a Value Stock?

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."

If you're looking for one great stock to kick off your portfolio, don't forget to read up on our chief investment officer's Top Stock for 2012. It's an emerging-market retailer that Wall Street is still blind to, and that's a good thing. Click here to read more.

If you'd like to learn about more Foolish investing before jumping in with both feet, don't forget to take a look at our Motley Fool YouTube Channel. There you'll find incredible content for the advanced and beginning investor alike. Watch more here.

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.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1903941, ~/Articles/ArticleHandler.aspx, 10/25/2014 6:38:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement