Combining value investing with growth investing
When value investing and growth investing are combined, investors look for reasonably priced, excellent companies to hold for the long haul. In this case, valuation is a concern, but investors don’t need to quibble over a few dollars. It turns out that it’s tough to buy excellent businesses at prices that seem undervalued anyway, so this opens the door to plenty of new opportunities. Baidu.com, Inc. (ADR) (NASDAQ: BIDU) makes a great example. The company may trade at 17.5 times earnings and seven times book value, but its leadership in online search and digital advertising in China gives the company significant growth opportunities over the long haul.
The Warren Buffett Way
Combining value investing with growth investing allows investors to choose among top-notch businesses, buy at reasonable prices, and avoid the major volatility of strict growth investing. It may sound Motley, but it’s an excellent way to invest. Don’t take my word for it; take it from Warren Buffett: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
The article Value Investing vs. Growth Investing originally appeared on Fool.com and is written by Daniel Sparks.
Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu and Bank of America.
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