The Three Ways to profit on a stock

Haywood Kelly writes, "My future return on the stock can come in three ways. The company can grow. The price multiple between my purchase date and the sale date can rise. Or I can collect dividends and earn the return that way.

The way this is usually expressed is:

Return = Earnings Growth + Change in P/E + Dividend Yield.

Expressed crudely and admittedly too simplistically, a growth investor will focus on the first component, a value investor on the second, and an income investor on the third."

The charts in the article remind me of the charts in Peter Lynch's book, One Up On Wall Street.

And speaking of Lynch, here's a nice post I found while browsing Shai's blog. See also the Lynch link in the entry below.