growth stock

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Growth stock

Common stock of a company that has an opportunity to invest money and earn more than the opportunity cost of capital.

Growth Stock

Share in a company performing better, or expected to perform better, than its industry or the market as a whole. Shares generating a return on equity of greater than 15% are generally classified as growth stocks, but not all growth stocks are classified as such. Such stocks usually pay little to nothing dividends as the companies reinvest most of their earnings. Some believe that many or most growth stocks are overvalued, citing for example the large number of growth stocks during the dotcom bubble.

growth stock

The stock of a firm that is expected to have above-average increases in revenues and earnings. These firms usually retain most earnings for reinvestment and therefore pay small dividends. The stock, often selling at relatively high price-earnings ratios, is subject to wide swings in price. Examples include Intel, General Electric, and Dell.
References in periodicals archive ?
Since growth stocks tend to outperform value stocks under these conditions, Schwab now recommends clients overweight growth in their portfolios.
Growth stock investors focus on companies expected to sustain above-average earnings increases.
Growth stock investors believe that future earnings are critical in determining a company's worth.
Middle capitalization (midcap) growth stocks are securities which fall into the Russell Midcap[R] Index.
Valuation: After two and a half years of flat performance, growth stocks are trading at their lowest valuation relative to the S&P 500 in over a decade.
Large growth stocks outperformed large value stocks in the final quarter of '93 when the Russell 1000(R) Growth Index gained +2.
In addition, the correction in growth stocks has led to some excellent valuations on some very solid growth companies, such as Merck & Co.
Based in Beverly Hills, Emerging Growth Stocks, LLC (EGS) has earned a reputation as one of the premier sources for valuable investment advice and stock recommendations for individual investors, money managers, broker-dealers, and fund managers.
The rotation to cyclicals has caused growth stocks to underperform," Neel continued, "but based on their expected growth rates, the price-to-earnings ratios (the price of a stock divided by its earnings per share) of many growth stocks are currently at discounts to their expected growth rates.
This forecast is more favorable for the earnings of growth stocks than for the earnings recovery of basic cyclical industries," Lewis said.
Within the United States, large-cap growth stocks continue to be the favorite, with more managers bullish on that segment of the market than any other.