Growth stocks and value stocks are used as the basis for dividing the company, which is actually meaningless separation. The growth of a company is part of its corporate value. Such growth can be an important factor in corporate value, or it can be positive or negative.
Value stock mainly refers to stocks that satisfy criteria such as low PER, low PBR, and high dividend yield. Even if these criteria are satisfied, we cannot be sure that the value of a company is higher than the price at which it is truly traded. It is necessary to check whether the economic feasibility of the entire industry in which the company operates is declining. You can think of a camera film company that disappeared with the advent of digital cameras.
Conversely, high PER, high PBR does not mean that the value of a company is less than the price at which it is traded. Think of a global platform company that has grown at an incredible rate over the past few years.
Corporate growth is viewed primarily as a positive factor among investors. Nevertheless, this growth is always desirable only when the money is reinvested and can maintain or improve high returns. Consider a case in which shipbuilding companies, which were booming in 2000-2010, were restructured due to excessive debts resulting from incorrect demand forecasts and unreasonable expansion.
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