Growth stocks can be found in any sector. It can be a mid-cap, small-cap or a large-cap. Stocks are considered growth stocks until they have not realized their full potential. Investors are confident of the company\u2019s business model and are confident of their chances of expansion in the near future. Several reasons might enthuse confidence among investors such as the company’s position with respect to its competitors or expectation of a good response from the company\u2019s next range of products. <\/p>\n\n\n\n Value stocks <\/em>are usually companies with sound financials. These companies are also larger in size. Securities fall under this category when analysts believe that they are trading below its actual worth. For instance, <\/p>\n\n\n\n the book value — company\u2019s asset minus its total liability — of\na company is Rs 30 a share and its shares are currently trading at Rs 20 a\nshare, analysts might consider investment in such stocks as value investing.<\/p>\n\n\n\n When do stocks get undervalued?<\/strong><\/p>\n\n\n\n Stocks may sometimes undergo a sudden and sharp erosion in its value.\nIn the day and age of 24 hour media coverage, a rumour or news story critical\nof the company\u2019s management may come out and cause a panic sell-off. <\/p>\n\n\n\n Often a promoter of the company may earn in his personal\ncapacity, causing some reaction on the stocks. However, if the company’s\nfinancials are sound, downward movement of price in such scenarios become entry\npoints for value investors.<\/p>\n\n\n\n If no significant damage is done to the company\u2019s finances, value\nstocks tend to recover with time as negative sentiments are slowly forgotten\nand people focus on the fundamentals of the company to make buy or sell\ndecisions. <\/p>\n\n\n\n Blended Category<\/strong><\/p>\n\n\n\n Not all stocks can be categorized as value stock or growth stock.\nSome show mixed traits and are considered to be undervalued and also have\nstrong potential in the long term.<\/p>\n\n\n\n Growth vs Value Investing; How to go about it? <\/strong><\/p>\n\n\n\n There are two ways you can invest in value stocks or growth\nstocks. One, you can invest in individual stocks, second, you could purchase\nmutual funds or exchange-traded funds.<\/p>\n\n\n\n If you are buying individual stocks, you are in control of your\nportfolio and can invest in value or growth companies. Investing in mutual\nfunds would give the fund manager the responsibility to allocate the assets in\ndifferent value or growth stocks.<\/p>\n\n\n\n Investors who wish to invest in both growth and value stocks can\ninvest in blended funds, which have the mix of both types of stocks.<\/p>\n\n\n\n Which investment style should\nyou adopt?<\/strong><\/p>\n\n\n\n Since value stocks are usually found among established and stable\ncompanies, they are considered to be less risky than growth stocks. Besides,\nvalues are more likely to pay dividends to investors.<\/p>\n\n\n\n Growth stocks, however, rarely pay dividends. They reinvest the\nearning to fuel growth. Such companies might be risky to invest in. Growth\nstocks may provide returns but also cause loss depending on their products\nperformance. Therefore growth stocks usually possess the highest potential\nreward, as well as risk.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2020\/08\/2-1-1024x680.jpg\")
<\/figure>\n\n\n\n