Value and growth investing are two different stock picking methods based on contrasting strategies and philosophies. Value investors analyse fundamental data, such as earnings, dividends, assets, and liabilities to estimate an intrinsic value for a company. Value investors believe that they can generate greater long-term returns, by investing in companies that are undervalued. Conversely, growth investors aim to identify companies that they believe have a strong potential for revenue and earnings growth. Growth investors will pay a premium for these companies, to achieve higher returns over the longer-term.
In this article, Perpetual Investment Management provides an outlook for value and growth investing in the current market environment and summarises the differences between the two investment approaches.