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Value Stocks

Risk and Return of Value Stocks

For all their potential upsides, value stocks are considered riskier than growth stocks because of the skeptical attitude the market has toward them. For a value stock to turn profitable, the market must alter its perception of the company, which is considered riskier than a growth entity developing. For this reason, a value stock is typically more likely to have a higher long-term return than a growth stock because of the underlying risk.

A value stock may need some time to emerge from its undervalued position. The risk of investing in a value stock is that this emergence may never materialize.

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