8 – L1 06 Growth Vs Value V2

Indices can also include stocks based on whether companies are considered growth or value stocks. So, what’s a growth stock, and what’s a value stock? A growth stock tends to have high growth in sales or earnings and potential for future growth. For example, if a company creates new ways for people to make purchases with bitcoin or new ways for people to commute to work, it might be considered a growth stock because of its potential for increased future sales. A value stock tends to be a mature company that has stable sales, revenue, and earnings. For example, a company that sells household and bathroom products may have a stable flow of earnings, but has fewer expectations for rapid growth.

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