Stocks are usually lumped into either value or growth categories. Investors make money in both growth and value, but one style might make more sense for you depending on your personal time horizon, risk tolerances, return objectives, etc. Value stocks have outperformed growth stocks when compared over the past 50 years. Low cash, negative cash flow and management changes can signal internal problems. Growth investors often buy great companies growing rapidly and make a lot of money.
Growth companies can produce eye-popping returns.
However, a growth stock can easily disappoint investors and drop like a rock in a single trading day. Lucent technologies recently beat estimates but said that growth in the coming months might be a bit slower. When a stellar growth company hits a temporary snag, be ready. These deals come along once in a while and the investor who is ready can take advantage. IBM is now considered to be poised for new waves of growth in the mainframe and Internet areas.