These two investment styles outperform at different times. That's why investors need both kinds of stock in their portfolios. The stock market can be divided into two types of stocks, value and growth.
Growth stocks represent companies with rapidly expanding earnings growth.
To determine whether a stock fits in the growth or the value camp, investment managers analyze earnings and assets relative to the stock's current price. High-speed earnings growth typically indicates a growth stock. A stock priced low relative to company assets or earnings is regarded as a value stock. The effects on returns These differences affect the performance of growth and value stocks. At any given time, one style is in favor.