Growth Stocks
Major Stock Picking Strategies
growth stock
Efficient stock picking strategies are important for an investor in order to grow his/her personal wealth significantly. An investors stock picking strategies depend upon several factors including the performance of companies, market and industry trends, and share prices.
Growth Investing
Through growth investing strategy, investors focus on rapidly growing companies, which are witnessing significant increase in revenues and profits. Normally, returns from growth stocks are substantially higher than that of other type of stocks. Growth investors pick young and fast-growing companies, despite the expensiveness of these stocks, as the investors bet on the future growth potential of the companies.
Value Investing
Value investing is opposed to growth investing. Value investors focus on stocks, which are trading below their intrinsic values. Value investors look into the fundamentals of the companies carefully and they believe that the market undervalues these stocks. Value investing does not mean that choosing a cheap stock, rather investing in undervalued stocks that have good growth potential.
GARP Investing
GARP (Growth At Reasonable Price) is a combination of value investing and growth investing strategies. Through GARP investing strategy, investors focus on stocks that are reasonably priced, at the same time possess robust growth potential.
Fundamental Analysis
Fundamental analysis is a stock picking strategy through which an investor or analyst tries to estimate the intrinsic value of a stock based on fundamentals.
Technical Analysis
Technical analysis, also called chart analysis, is an investing strategy through which investors gauge the future price movement of a stock through past performance.
Value Stocks Vs Growth Stocks – Which Are Better For Your Portfolio?
Its a very common question among individual investors, which is the better bet: value stocks, or growth stocks?
If you are 25 years old and looking for 15% returns annually for a number of years, you will need to go heavier on growth stocks. If you are 65 years old and looking for a little extra income for when you are 75 years old, you will likely be looking to deep value stocks.
Ideally, you really should have some amount of growth stocks and some amount of value stocks in your portfolio to diversify. Diversify means like about 60% in growth names, and 40% in value names. If you are in too many growth names that are too volatile for you, maybe you need to add a classic value stock.
If you are in all value stocks and believe you aren’t getting the returns you need, go pickup a growth stock.
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