Growth vs Value Investing Styles

Growth and value are two broad, commonly discussed investing styles that describe different approaches to selecting stocks, based on different assumptions about where returns are likely to come from.

Growth Investing

Growth-oriented investing generally focuses on companies expected to increase revenue and earnings at an above-average pace, even if their current share price appears expensive relative to today's profits. The expectation is that strong future growth can justify a higher current valuation.

Value Investing

Value-oriented investing generally focuses on companies that appear inexpensive relative to their current fundamentals, such as earnings or assets, on the theory that the market may be underappreciating the business for a temporary or overlooked reason.