10 Growth Stocks at Reasonable Prices
We examined the 500-plus holdings in the Morningstar US Growth Index and found some stocks with decent growth prospects at reasonable valuations.
Growth investing means different things to different people. Some investors would gladly pay a premium to own a share of a fast-growing company. More price-sensitive investors, on the other hand, would like to see a suitable margin of safety before shelling out their hard-earned cash.
Growth companies are generally thought of as high-quality firms, and they often trade at high price/earnings and book/value ratios as they are believed to have an above-average chance of growing their earnings faster than industry peers or the market as a whole. By contrast, value stocks, as we discussed last week, are often "cheap for a reason"; in other words, they are facing a tough economic environment, or a tough business outlook. Perhaps they are under some sort of regulatory or litigation risk, or there is uncertainty about the company's future. Maybe there are new managers in charge or the company is undergoing a restructuring, or both.
Karen Wallace does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.