Using Value, Growth, Income & GARP for Stock Analysis

When doing stock analysis to buy shares, investors should also focus on Growth At A Reasonable Price (GARP), Growth, Value and Income of a company.

Value Stocks – There could be stock that may have been underestimated or overlooked by other investors. These stocks can have values. Maybe prices of these stocks have gone down because of some bad news or event or maybe the stock falls in a sector that is underestimated by most investors. You must remember that the company possesses fixed assets like land and buildings, inventories, subsidiaries etc. These assets have value. Value investors will understand the potential of the stock and invest or hold its shares until the rest of the market realizes the actual value of the assets of the company. Companies like Templeton Mutual funds often practice this strategy.

Valuing Stocks
Growth Stocks – Here the strategy is to buy stocks that have great growth and earning potential. Investors must target companies that are growing faster than its competitors. Such companies pay little to no dividend and reinvest their profit to grow their business. These are long-term investment because companies need time to grow. Short-term investors can avoid these stocks.

Income – Investors buy stocks for two reasons – to sell at higher rates and to get income via dividends. Investors interested in regular income through dividend can pay high dividends.

GARP - Growth at a Reasonable Price (GARP) combines the features of both growth investing and value investing. GARP investors look for companies that are showing at consistently at reasonable rate. GARP is considered to be the best investment strategy.

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