Stock investors typically classify themselves into one of two categories: value or growth investors. Each of these camps has distinct preferences and philosophies when it comes to picking stocks.
The former hunt for undervalued companies, often in stodgy industries like industrials or consumer staples. Their goal is to find a stock priced unfairly by the market and trading lower than its intrinsic value. To that end, they often rely on metrics such as price-to-book, price-to-earnings and dividend yield ratios to identify potential bargains.
In contrast, growth investors focus on companies projected to grow at an above-average rate, predominantly in more attention-grabbing areas like the technology and consumer discretionary sectors. Key indicators for them include earnings growth rate, return on equity and revenue growth.
