Types of Companies

Some high-growth-focused companies don’t offer dividends because all their profits are applied to help sustain higher-than-average growth. This introduces a distinction that is often used to define different types of investing strategies as either growth or value oriented. Growth investing focuses on buying stock in companies with anticipated upside and room to grow, offering the potential to increase the overall value of the company and your investment. Value investing is buying shares at a perceived discount over their intrinsic value, and expecting the stock price to eventually rise to reflect this. A third type could be considered, income investing, which concentrates on stocks with large dividends, which when reinvested allow the value of the investment to grow, with an added bonus if the stock price also happens to increase. Obviously, finding stocks with several, or all three of these characteristics, could be quite profitable, and will be our ultimate goal in stock investing.