Growth vs value investing–how do these strategies differ and which one is right for you? This decision will mostly depend on your personal financial goals and your investment preferences, though many building a stock portfolio utilize both strategies for better diversification.

With all the volatility in the markets these days, you may see these terms thrown around a lot and wonder which route would be best for you. Regardless, though, you can rest assured our stock advisory will support you to win more trades with less work either way. 

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In the meantime, you can learn more about each investment strategy below and how value vs growth investing compare. By the end of this article, you’ll be well-equipped with the necessary information to start with one of these stock investment strategies. 

Value Investing vs Growth Investing: What Are The Differences?

When comparing growth vs value investing and deciding which strategy investors should utilize, they need to be aware of the key differences between the two, and when each strategy is better suited to their needs and preferences. 

Similar to the decision to choose between swing trading and long-term trading, investors need to decide the time horizon that they are looking to invest over, and what their personal financial goals are. 

What Is Value Investing?

First things first – what is value investing?

Value investing is a type of strategy where you are able to buy assets, in this instance, stocks, at or below their actual value. This type of investing is seen as getting a good deal on stocks when the price is right, and the reason the shares are undervalued could be due to a variety of factors such as disappointing quarterly earnings or a short-term setback across the industry. 

Value stocks tend to be in traditional industries with predictable business models and sources of revenue rather than providing something flashy and new. They also tend to have a higher dividend yield. 

When comparing value vs growth investing, value investors look for current undervalued stocks compared to their perceived earnings and revenue growth potential. Value stocks don’t grow quickly; rather, they provide steady and reliable growth over time. This falls in line with blue chip investing. 

Here are some of the most noteworthy value stocks trading on the market right now:

  1. Berkshire Hathaway (BRK)
  2. Cisco Systems Inc. (CSCO)
  3. Deere & Company (DE)
  4. Comcast Corp. (CMCSA)
  5. Cigna Group (CI)
  6. Proctor & Gamble (PG)
  7. Sony Group Corp. (SONY)
  8. Telus Corp. (TU)
  9. JPMorgan Chase (JPM)
  10. Unilever PLC (UL)

What Is Growth Investing?

Now, let’s look at the other side of the growth vs value investing debate.

Growth investing is often done with shares of small, quickly-growing companies that are becoming industry leaders in a short period of time. 

In regards to financials and what to look out for when doing growth investing vs value investing, these types of companies typically prioritize growing revenues quickly, with less of an emphasis on profitability at the onset. We have a more detailed guide on finding the best aggressive growth stocks if you’re interested.

Investors recognize the quick growth, which increases the perceived value of these companies, and thus, the value of their stock. Because of this, key stock indicators like price-to-earnings are generally higher for these companies. 

The idea is that with increased investor buy-in, the price of the stock rises, which makes the investors happy, and then the cycle continues, bringing them returns on their initial investment and making the company look good to new investors. Here are the top 10 growth stocks as of 2024:

  1. NVIDIA (NVDA)
  2. Visa Inc. (V)
  3. Advanced Micro Devices (AMD)
  4. Amazon (AMZN)
  5. Meta Platforms (META)
  6. Adobe Inc. (ADBE)
  7. Microsoft (MSFT)
  8. Apple Inc. (AAPL)
  9. Tesla (TSLA)
  10. Shopify (SHOP)

The question is, should you buy growth vs value stocks? We’ll help you find out below.

Value Investing vs Growth Investing: Which Is Right For You?

Now that you have a better understanding of the two strategies and how value and growth investing differ, we can discuss when each method is better for investors and which one is right for you to get started with. 

When thinking about value investing vs growth investing, both strategies can be extremely beneficial for investors, which is why your portfolio may incorporate bits and pieces of each investing style for better diversification and maximum gains.  

In simple terms, the major difference between value vs growth investing is that with value stocks, investors think the companies are undervalued by the market at large. Meanwhile, growth stocks often show outsized growth potential. Just like when you’re considering swing trading vs position trading, there is no clear answer for which method is better, or which one you’ll be more successful with.

But, answering questions like how soon you want to see growth, your personal financial goals, and considering your preferences can help you make the decision to use value investing vs growth investing. So, let’s break down the differences a little more. 

Value stocks are more income-producing than growth stocks

Investing in value stocks often provides investors with regular income through frequent cash dividends, which value companies offer to attract investors rather than promise quick growth. 

On the contrary, growth investing is probably better suited for investors who aren’t looking to get regular income via dividends from their portfolios. 

Growth companies typically don’t prioritize paying out cash dividends to shareholders, preferring instead to retain these earnings and plow them back into investments to boost further growth. 

Price graphs are more stable for value stocks

The share price of growth stocks tends to be more volatile, so investors looking to utilize a growth strategy shouldn’t be concerned by regular price swings. When it comes to value investing, this strategy is better suited for investors who are looking for shares with more stable and steady price trajectories, without frequent fluctuations. 

You may follow a specific screening and investing technique known as “ruler stocks”. As the name suggests, the consistency and predictability of these stocks is so solid that you can draw a straight line through their quarter to quarter 12-months earning performance. 

The best part? Finding them with the VectorVest software is so simple – just screen for stocks with Safety>=1.40 and Growth Rating>=14%. We’ll talk more about how to pick a stock with the best stock picker shortly.

Value stocks realize their potential quicker than growth stocks

Patience is a big part of growth investing, because growth stocks often take a while to realize their full potential so you need to make sure you have the time horizon to let these companies grow. 

On the other hand, value investing is a good idea for those who are looking for a quicker payout. This doesn’t typically happen within a matter of days or hours, but it can be a relatively quick turnaround period for the price to rise substantially if the company is on a solid path forward. 

Both have different strategies for identifying opportunities

Part of implementing growth investing is also being able to choose the winners in growing industries, so if this isn’t in your skillset, maybe growth investing isn’t the right style for you. 

At the same time, value investors need to avoid value traps, and not assume that just because a company’s shares are cheap, it is a good deal. 

So, when you identify a company with an attractive valuation and a nice entry point, make sure to look long-term to see if their growth prospects have diminished and are no longer competitive in their market. 

Value vs growth investing: The Verdict

Considering the above-mentioned factors and which style you identify more with, you can realize which method is right for you and decide between growth vs value investing. 

  • Are you more flexible with your investment timeline, and can handle the price swings? Growth investing is better for you.
  • Are you looking for income-producing stocks with stable and reliable growth? Value investing is better for you. 

Again, it’s common for portfolios to have a good blend of each style, like finding the balance between trend trading and swing trading, though some investors show a distinct preference for one or the other. 

You can learn more about different approaches to investing in our blog, as comparing value investing vs growth investing is just the tip of the iceberg:

At this point, though, we want to set you up for success whether you choose value vs growth investing below with a few parting tips.

Tips For Success Whether You Try Value vs Growth Investing

Regardless of which investment style you choose to implement, there are some universal rules of thumb that all investors can benefit from. Continue reading to learn about some of the top tips for success when investing. 

Diversify your portfolio

When investing using any strategy, diversifying your portfolio is highly recommended to mitigate risks. So, when it comes to value investing vs growth investing, there is no right answer, and utilizing a blend of each style can actually improve your diversification. 

Ride out the highs and lows

Investors need to be aware that market fluctuations and downturns are par for the course. Making emotional decisions when seeing your portfolio is suffering or feeling invincible when you’re all in the green doesn’t help anyone over the long term, so be prepared to ride the wave and endure the market corrections. 

Remember you’re buying into a company’s future

Another important aspect to keep in mind no matter your choice of value vs growth investing is to remember what buying shares actually means. 

When you purchase stock, you are buying into a specific company, so you need to consider their future prospects and growth potential and whether you can expect some level of growth in their stock price. 

As mentioned above, don’t fall into the trap of buying cheap stocks just because you can–put some time into your research to make sure you are making informed investment decisions.  

Utilize the right tools

Above all, each type of investing hinges on having the right information to make profitable and informed investment decisions. You must be able to time your entries and exits with precision for maximum profits, like when utilizing swing or scalp trading. 

Even if you’re debating whether to implement growth investing vs value investing, having the right tool at your fingertips can take care of both of these aspects and can help you see more green in your portfolio no matter which style you choose. 

In a sense, you can use tools that help you identify when a market has bottomed out and get in on value stocks at the best time. There are screeners that return the best investment opportunities at any given time. Why do all the research and hard work yourself when formulas are in place to do it for you? That’s where VectorVest comes in.

VectorVest offers stock forecasting tools that can help investors better predict future price movements, and time their trades accordingly. It has outperformed the S&P 500 index by 10x over the past 20 years and counting, all while saving investors time and stress. This is why it’s the best stock app for iPhone or the best stock app for Android.

Whether you’re looking for the growth vs value stock, the best blue chip dividend stocks, falling stocks to buy, high volatility stocks, the best stocks to buy for beginners, the best stocks to swing trade, or anything in between, you can find pre-curated stock screeners that bring the best opportunities to your fingertips on a daily basis.

Then, you can follow the simple buy, sell, or hold recommendation offered for all 16,000+ stocks we rank to make calculated decisions and eliminate guesswork, emotion, and uncertainty from your decision-making.

The benefits of using a tool like VectorVest cannot be understated and can provide traders with an upper hand in the markets. To see how VectorVest works for yourself, try out our free stock analysis to get started. 

Final Thoughts On Growth vs Value Investing

It’s one thing to read about the various investing styles and choose the right strategy for you, but it’s another thing completely to try it out for yourself. 

Many portfolios have elements of both growth and value investing in them, and over the long-term, neither strategy has outperformed the other. Choosing between growth vs value investing largely comes down to personal preference and where your financial goals and skills lie, though there is no wrong answer. 

You can learn more about investing in our blog with resources on how to buy the dip, investing after retirement, best stock research sites, when to sell stocks, live off dividends in retirement, free stock analysis websites, how to analyze stocks, and more.

Regardless of the path you choose to take–growth investing vs value investing–utilizing the right tools can be the difference between a shrinking portfolio or soaring gains. Give yourself the best chance at success in the stock market by trying VectorVest today.

Not only can it provide you with real-time insights into the markets, but it also gives you concrete advice about whether you should buy, hold, or sell certain shares–without having to play the guessing game. 

There’s no other stock trading system that can give you peace of mind when making trades like VectorVest. To see the difference firsthand, try VectorVest for yourself and start making better investment decisions today. 

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