What Is Growth Stock Investing
Growth stock investing has been getting popular among those stock investors with higher risk appetite. Such growth investing techniques yielded very good returns for those who can spot the younger companies in emerging technologies or rapidly expanding industries.
Growth stocks are companies that grow substantially faster than others. Its growth can be further verified by looking at growth in earnings and/or revenues which in turns directly translate into an increase in the stock price. As contrast to dividend stocks, profits from growth stock investments are realized through capital gains and such returns can be significantly doubled within 5 to 7 seven years. Most growth companies during their initial development stage will likely to reinvest their earnings to expand their product range and generally do not pay a dividend.
Growth Stock Investing Vs Value Investing
Novice investors often confuse over the difference in growth stock investing and value investing. Value investors are looking for bargain stocks trading for less than what they are worth for. On the contrary, growth stock investors focus on the future potential of a company, with much less emphasis on its present price. Growth stock investors buy companies that are trading higher than their current intrinsic worth with the belief that the companies’ intrinsic worth will grow and therefore exceed their current valuations.
What Are The Growth Stock Investing Techniques
There are different methods or criteria in picking up the right growth stocks in the right industry. Therefore, growth stock investors will evaluate the company in relation to its past performance and its industry’s performance.
Earning Per Share (EPS) growth rate, Return on Equity are some of the common financial ratios used by investors to evaluate a particular stock. But to a novice investor for a start, he or she still need a lot of mentor guidance and most importantly, a proven system to pin point the exact entry and exit price.
Before any investor jumps onto the growth investing bandwagon, he or she must realize that this is a higher risk strategy as compared to investing in undervalued stocks.
In Value Investing College, students will be taught to use a systematic approach in building up their own stock portfolio which includes growth stocks. Check out the available free value investing seminar singapore at the top right form of the website and sign up now!