Stock Value

Key Takeaways

  • A stock's value is based on the corporation's ability to create and grow profits.
  • Earnings expectations are based on economic, industry, and company-specific factors.
  • The size of the market capitalization affects stock value.
  • A stock's market popularity or perception of value affects its value.

  • Stocks can be characterized by their expected behavior relative to the market as

    • growth stocks,
    • value stocks,
    • cyclical stocks,
    • defensive stocks, or
    • other named types (e.g., blue chip stocks, penny stocks).