Three styles
| Style | Looks for | Key metrics | Main risk |
|---|---|---|---|
| Growth | Companies growing much faster than the economy | Revenue growth, EPS growth, PEG | Paying too much; growth slowing |
| Value | Good companies priced below what they are worth | P/E, P/B, EV/EBITDA | "Value traps" that are cheap for a reason |
| Dividend | Reliable, growing cash payments | Dividend yield, payout ratio, Free cash flow | Dividend cuts; slow growth |
Growth
Growth investors accept a higher P/E if earnings will grow into it. The PEG ratio links the two. The danger is when growth slows: a high multiple and falling growth together can halve a stock.
Value
Value investors buy when the price is low compared with earnings, assets or cash flow, expecting the market to correct. The work is telling a temporary problem from a permanent one.
Dividend
Dividend investors want cash income. Check that the dividend is covered by free cash flow and that the payout ratio (dividends divided by earnings) is not near or above 100%.
Blending them
Many investors blend styles, for example growth at a reasonable price (GARP), which looks for strong growth with a PEG near or below 1. The four-pillar scoring model on this site is a GARP approach.
See also
- P/E ratio (price-to-earnings) What the P/E ratio means, trailing versus forward P/E, what counts as high or low, and why P/E alone can mislead without growth.
- PEG ratio The PEG ratio divides the P/E by earnings growth, so it judges valuation and growth together. What the bands mean and how to use it.
- Price-to-book ratio (P/B) Price-to-book compares a company's market value with its accounting net worth. Where it is useful, such as banks, and why it fails for modern companies.
- Free cash flow Free cash flow is the cash a business generates after investing in itself. How it is calculated, why it can differ from earnings, and FCF yield.
Pages that link here: A long-term investing philosophy
Last updated September 30, 2026. Education only, not investment advice.