How to distinguish value stocks from growth stocks?
Is Infosys Technologies a value stock or a growth stock? This specific question reveals a broader dilemma that seasoned investors face today when the market is moving up rapidly.
Query Bharat Shah who manages more than Rs 2,500 crore at ASK Raymond James and he will most probably tell you that the company is a value stock. Based on FY08 earnings the stock is traded at a price to multiple of 25 times which is lower than the expected growth rate 30% in future.
In a way he is saying that the intrinsic value of Infosys is far higher than the present market price that the company commands and this makes it a value stock.
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Additional Reading:
- Avoid bubbles, buy cheap Value buying continues to have its votaries over growth investing.
