We generally hear the terms Growth Investing and the value investing in the financial world but most of us are not exactly clear about their meaning and the implementation. Although, there is no hard and the fast rule that define these terms but there are certain general criteria which set apart these two financial terms.
The Growth stocks are those companies which generate substantial positive cash flows and whose earnings are expected to grow at the faster rate than the average market rate.
The growth stocks are generally over valued and expensive but because of their inherent nature to grow; these companies are preferred by the investors in spite of their high price.
The growth investing and the value investing are the investment styles which are adopted by the investors. At one time you may find that value investing is giving better returns while on other growth investing is appreciating with time.
Therefore, understanding the basics of both the investment styles may help you to take your investment decisions prudently. Keeping both types of stocks in your portfolio can help you to increase your returns and manage your risk effectively and efficiently.