Home Investing Why Are Investors Rotating Into Value Stocks?

Why Are Investors Rotating Into Value Stocks?

Author

Date

Category

Value stocks are the ones that usually trade at a relatively lower multiple like price to book (P/B), price to earnings (P/E), enterprise value to EBITDA (EV/EBITDA), or just simply are at a discount to their intrinsic net worth, often known as the discounted cash flow (DCF) valuation. Growth stocks are usually the ones that have higher growth potential.
A company being relatively early in its industry life cycle, delivering a new technology or product can be a few reasons fueling this growth, which is often reflected in the company’s sales or earnings number.

Value stocks have underperformed growth stocks for over a decade now. This can be observed through the valuation of sectors like financials, industrials, and materials. Growth stocks have outperformed every other factor over the years, the perfect example would be the FAANG (Facebook, Amazon, Apple, Netflix, and Alphabet’s Google). Sectors like technology and biotechnology comprise mostly of growth stocks and tend to trade at higher valuations.

Linda Barbara

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vestibulum imperdiet massa at dignissim gravida. Vivamus vestibulum odio eget eros accumsan, ut dignissim sapien gravida. Vivamus eu sem vitae dui.

Recent posts

Should you buy a reusable cotton swab? We found out

Giving sustainable gifts can be difficult, especially when it comes to stocking stuffers. Not everyone is delighted to receive thrifted items or homemade gifts....

Who Owes How Much In Student Loans?

According to the Federal Reserve, Americans owe $1.7 trillion in student loans as of September 30, 2020. Let’s break it down into who owes...

11 beauty products celebrities swear by

We all know that most celebrities have a team of makeup artists and access to top-notch, often-expensive products to keep their appearance looking camera-ready....