Enable Accessibility
×
Close
Personal Online Banking
All personal banking clients, please enter your online credentials here:
e‑Treasury Business Banking
Log in
Safeguarding your online banking sessions is our top priority. For information about how you can help protect your online banking sessions, or if you need additional assistance with your e-Treasury log-in, please contact Client Support at [email protected] or 855.274.2800.

Download our e-Treasury Secure Browser

Business Online Banking
If you need assistance, please contact Client Services at [email protected] or 855.274.2800.
e‑Treasury
Log in
Safeguarding your online banking sessions is our top priority. For information about how you can help protect your online banking sessions, or if you need additional assistance with your e-Treasury log-in, please contact TM Service at [email protected] or 212.575.8020.


Download our e-Treasury Secure Browser

Download the Sterling e-Treasury Token Client


Business Online Banking
If you need assistance, please contact Client Services at [email protected] or 855.274.2800

For optimal viewing experience, please use a supported browser such as Chrome or Edge

Download Edge Download Chrome

Growth vs. value: two approaches to stock selection

Published on April 16, 2020 | LPL Financial

Growth and value are two fundamental approaches in stock and stock mutual fund investing. Growth stock mutual fund managers look for companies that they believe offer strong earnings growth potential. Value fund managers look for stocks that appear undervalued by the marketplace. Some managers combine the two approaches.1

Growth and value defined

Growth stocks are generally those of companies that have delivered better-than-average earnings and are expected to continue growing rapidly. “Emerging” growth stocks are expected to do the same, but the underlying companies are relatively new and have not established an earnings history.2 Investors are usually willing to pay higher-than-average prices for growth stocks, hoping to sell these stocks at even higher prices. The risk is that a growth stock’s lofty price could fall sharply on any negative news about the company, particularly if earnings disappoint Wall Street.

Value stocks are generally those of companies that have fallen out of favor in the marketplace and are considered bargain-priced compared with potential long-term value. Typically, value stocks are priced much lower than stocks of similar companies. This lower price may reflect investor reaction to recent company problems, such as disappointing earnings, negative publicity, or legal issues. Value stocks may also include new companies that haven’t been noticed by the marketplace. The idea is that stocks of good underpriced companies are believed to bounce back when their true value is recognized. But this may take time and, in some cases, may never materialize.

The primary measures used to define growth and value stocks are the price-to-earnings ratio (P/E) — the market price of a stock divided by the earnings per share — and the price-to-book ratio (P/B) — the share price divided by the net asset value per share. Growth stocks usually have high P/E and P/B ratios. In contrast, value stocks typically have relatively low P/E and P/B ratios.

Two styles that may work well together

For many investors, there may not be an absolute advantage to any single approach. Instead, they may strive for the best-possible returns with minimum risk by combining growth and value investing. This approach allows investors to potentially gain throughout economic cycles in which general market situations favor either growth or value stocks.1

To learn more about growth and value investments, ask a qualified financial professional. He or she can tell you about your options, including mutual funds that invest with a growth or value approach.

Source/Disclaimer:1Investing in stocks involves risks, including loss of principal. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk.

2Emerging markets are generally more volatile than the markets of more developed foreign nations, and therefore you should consider this increased market risk carefully before investing. Investors in international securities may be subject to higher taxation and higher currency risk, as well as less liquidity, compared with investors in domestic securities. Returns are in U.S. dollars and reflect effects of currency fluctuations.

Required Attribution

Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2018 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

Related Resources

Webster InvestmentsArticles
Considering an Annuity for Your 401(k) Rollover?
Your financial professional can help you understand your 401(k) rollover options With companies downsizing to stay in business and corporate takeovers occurring almost every other day, the only thing certain in anyone’s career these days is change. Take Chris Brown, age 48, for example. After 15 years as a shop-floor supervisor at a large manufacturing […]
Webster InvestmentsArticles
An Annuity Can Help Restore Your Confidence in Retirement
Sometimes we forget just how fragile a nest egg can be. When the economy tanked in 2008, retirees watched in horror as U.S. markets suffered historic losses. The Dow declined by more than 50%, its biggest drop since the Great Depression of 1929. The oldest Baby Boomers, who were closing in on retirement age just […]
Webster InvestmentsArticles
Choosing a 529 Plan
Introduction Choosing a 529 plan means first deciding whether a college savings plan or a prepaid tuition plan appeals to you. If you decide on a prepaid tuition plan, you’re generally limited to the plan offered by your state. But if you choose a college savings plan, you’ll need to decide on the specific plan […]
Connect With Us
Learn more about Webster products, services and the communities we serve.
We’d love your feedback
×