Stocks bought for expected growth versus stocks seen as cheap
Growth stocks are bought on the expectation that sales and profits will rise sharply. Their prices tend to be high relative to current earnings, so their P/E ratios run high. Value stocks are priced low relative to earnings or assets, and tend to show low P/E and P/B ratios. There is no fixed dividing line, and the same company can be seen differently at different times.
A company on a P/E of 40 growing sales 30% a year is often called a growth stock; one on a P/E of 8 and a P/B of 0.7 is often called a value stock.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.